June 4, 2013

SEC OKs Use of Social Media To Share Corporate Information, But Do Investors Want That?


SEC Social Media

As a lover of tech and early adopter, I was intrigued when Marketwired contacted me and offered one of their newest research about investing. Along with the info they send me a great infographic that captured the research in visual form. It was very eye-opening.

On April 2, 2013 social media was officially deemed an acceptable venue for publicly traded companies to disclose material information to investors by the U.S. Securities and Exchange Commission (SEC).

As an “over 40” investor and user of social media, I’m not often the target of financial information that’s served up online. I see a lot of articles aimed at Millenials, but when it comes to most of us Gen-Xers and BabyBoomers we’re often not seen as people who access financial information online. And when you look at  people who are seen as visionaries or “in the know” in the financial industry you’re often looking as people over 40. With their heavy influence, they’re trying to use it to stop many of the changes the financial sector is trying to incorporate with regard to digitally accessing and sharing financial data and information simply because they don’t think it’s a good idea.

Part of me agrees that social media isn’t the right place to disseminate important information to investors, especially given all the crazy changes implemented on social networks that actually prevent us from seeing information we really want. Nonetheless, why should we need to wait days or weeks for a mailing when we’re online enough to get the information in more of a real-time framework?

Marketwired’s April 2013 research shows that younger people (Millennials) want the ability to get their financial information through social networks, if they so wish. Gen-Xers are still more traditional in how they wan to receive their important financial information, although this is such a large group that it’s actually not easy to generalize us “over-40” folks.

Some key findings of the Marketwired study include:

    • Early adopters see change as progress: While Warren Buffet’s Business Wire has stated that they believe the SEC ruling is a disservice to investors, the data shows the opposite. In fact, 70% of investors under 40 believe the SEC ruling to allow companies to distribute information via social media benefits investors. The data shows an emerging generational divide: 60% of respondents under 40 regularly consult social media to research investment options and 53% of respondents under 40 believe information provided through social media is credible when making an investment decision.
    • Resistance is futile: 49% of people say their companies block access to social networks, but that’s not stopping them. 57% of people under 40 regularly access social media on their personal devices, reinforcing their belief that news being shared on social channels is a critical element of the investment research process.
    • The future is already here: 40% say they are already using social media as a key source of information in the investment process. 80% of respondents believe more companies will disclose information via social media.

SEC Social Media Investing Infographic

What do you think of companies using social media to share their important corporate info? Why does this matter? As the next generation of investors, analysts and researchers begin working on larger portfolios, social media will play a critical role in the process. This shift is already underway and will become more pronounced in the coming years. As a result, publicly traded companies can’t ignore social channels as a key investor relations tool.


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