The SEC Finally "Gets" Twitter - Almost

Last week the Securities and Exchange Commission (SEC) issued a rare Report of Investigation announcing the closure of its asinine enforcement action against Netflix and its CEO Reed Hastings. The investigation stemmed from Hastings having tweeted  in July 2012 the following: "Congrats to Ted Sarados and his amazing content license team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June...Keep going Ted, we need even more!". The SEC's complaint was that this tweet violated Regulation FD which is (rightfully) intended to prevent public companies from making disclosure of material, non-public information to select shareholders only. Regulation FD provides that material non-public information must be disseminated either by a filing with the SEC itself or in a manner "reasonably designed to provide broad, non-exclusionary distribution of the information to the public".  The legal issue then was whether disclosing information via Twitter was "reasonably designed to provide broad, non-exclusionary distribution of the information to the public". The SEC fudged - it said that companies could use Twitter feeds to disclose information but only if they had told their shareholders in advance they might do so. Hello? This reminds me of an exchange between Moe and Curly of the Three Stooges - Moe: "How dumb can you get?" Curly: "How dumb do you want me to get?" Reality check: Twitter has 500 million users, 340 million tweets per day and 1.6 billion search queries per day. Market professionals (and amateurs with even limited digital skills) always follow their companies (and company CEOs) on Twitter.  The SEC is still living in the days of press releases and purely curated content by large news organizations. Rather than taking the correct step of simply saying - "yes, Twitter is an appropriate platform for disclosure", it goes through the charade of making companies add a bit of boilerplate disclosure to the "Further Information" sections of their SEC filings saying "please follow our Twitter feeds for more info". That language adds nothing, and ignores the information-feed reality of the past few years.  Epic fail.