for CEOs and other senior managers of company to communicate through social
media platforms such as Facebook and Twitter. However, concerns have arisen
whether that amounts to selective disclosure of company information if that is
made available only on these specific platforms without being disseminated more
widely to enable greater access to investors.
Securities and Exchange Commission (SEC) has issued a report which permits
companies to use social media to disseminate information so long as investors
are forewarned as to which social media will be used for the purpose. In the
US, Regulation FD seeks to counteract selective release of information by
companies and requires them to disseminate it more widely so that it is
available to all investors and on a non-exclusive basis. SEC has specified that
above approach with respect to social media would be generally in tune with
Regulation FD, and this approach follows a similar stance adopted by the SEC a
few years ago with respect to information posted on company websites.
parallel of Regulation FD is contained in SEBI’s Prohibition of Insider Trading
Regulations, particularly Schedule II which contains a Code of Corporate
Disclosure Practice. Thus far, SEBI has not specified its policy on the use of
social media by corporates, but the broad rule set out by the SEC may be a
workable proposition in the Indian context as well.
More generally, the use of
social media for market information has recently been of interest to SEBI, as