Social Interaction

By Johnson, Hilary | Global Finance, June 2013 | Go to article overview

Social Interaction


Johnson, Hilary, Global Finance


Savvy executives can add value by understanding how and when social media can be a tool to improve both internal and external communication. By Hilary Johnson

No corporate treasury department is an island anymore. This is particularly evident in the growing role of social media in daily treasury and finance interactions with internal and external stakeholders. Increasingly, treasury and finance types are participating on platforms such as Linkedln, Twitter and Facebook and sharing expertise on internal platforms like Jive and Yammer, as companies strive to make use of the communication and collaboration opportunities that social media afford.

Adding impetus, the US Securities and Exchange Commission effectively blessed social media as a means of communicating with investors when it issued guidance in April, following an investigation of how Netflix used Twitter to convey material financial information.

The SEC noted it would not charge Netflix with any violation of Regulation FD (Fair Disclosure) and made it clear in its guidance that using social media channels like Twitter and Facebook is permissible, as long as the investing public knows to look there. So far, about 10 companies, including Zynga, AutoNation, and, of course, Netflix, have issued 8-K (SEC documentation) listing the social media channels that they may use to convey financial information.

The risk of violating Reg FD underscores the need for careful oversight, lawyers say. "Social media is a great potential medium for corporate communications but, as is the case with all aspects of corporate communications, it makes sense to pay attention to compliance with the legal details," says Joseph Grundfest, a former SEC commissioner and a professor at Stanford Law School. "The simplest rule of thumb is that there should be an appropriate set of controls over the persons with authority to speak on behalf of the corporation on social media."

FINANCIAL COMMUNICATIONS

Southwest Airlines is using social media as a tool to increase engagement throughout the company - including in the finance department.

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