A. SEC Says Social Media OK for Company Announcements if Investors are Alerted
In a press release on April 2, 2013, the SEC issued a report that makes clear that companies can use social media forums to announce key information in compliance with regulation FD (Fair Disclosure) “so long as investors have been alerted about which media will be used to disseminate such information.”
The report was triggered by a Facebook post made by Netflix, Inc. CEO Reed Hastings on his personal Facebook page in July 2012. Mr. Hastings posted that Netflix had streamed 1 billion hours of content during June 2012. Netflix did not report this information to investors through a press release or Form 8-K filing, and a subsequent company press release later that day did not include this information. The SEC decided not to pursue an action against Netflix or Mr. Hastings, and admitted that the case’s facts reflect new territory for the SEC. However, the SEC report stated that in the future the SEC would generally not consider the release of material nonpublic information on a company officer’s personal social media site to be an acceptable method of Regulation FD disclosure unless the company had previously announced that the site was a potential source of company information.
The SEC issued a Report of Investigation that can be found here.
B. SEC CHARGES City of Victorville, Underwriter, and Others with Defrauding Municipal Bond Investors.
On April 29, 2013, “The Securities and Exchange Commission . . . charged that the City of Victorville, Calif., a city official, the Southern California Logistics Airport Authority, and Kinsell, Newcomb & DeDios (KND), the underwriter of the Airport Authority’s bonds, defrauded investors by inflating valuations of property securing an April 2008 municipal bond offering.” The press release may be found here.
C. PCAOB Proposes Framework for Reorganizing Existing Interim and PCAOB-issued Auditing Standards
The new Public Accounting Oversight Board (PCAOB) proposal will reorganize the auditing standards “into a topical structure with a single integrated number system.” Additionally, “the PCAOB is proposing certain conforming amendments to rule 3101, Certain Terms Used in Auditing and Related Professional Practice Standards, and Rule 3200T, Intermin Auditing Standards.” More information and the proposed framework may be found here.