How has RegFD evolved? SEC’s Rules On How to Use Social Media

How has RegFD evolved? SEC’s Rules On How to Use Social Media

The SEC’s RegFD (Securities Exchange Act — Regulation Fair Disclosure), which went into effect in 2000, restricts “selective disclosure.” It, therefore, enforces public businesses to make important information available through widely accessible channels. This means that RegFD allowed only press releases, EDGAR filings, and quarterly earnings calls to be publicized thirteen years ago.

However, as the corporate practices evolved, SEC RegFD also adapted to social media usage. Nevertheless, under RegFD compliance, one must be highly cautious of their sharing on social media handles. With most of the world heavily dependent on social media, it is hard for businesses to market without it.

What RegFD Allows Businesses

** Insider Exception

You are allowed selective disclosure under Regulation FD if made when the company initially collects a confidentiality agreement from the other party. It is not important for the agreement to include an undertaking to not trade on the information. However, this regulation was made to make it easier to prosecute those who receive selective information for insider trading. This is because so many times, those who owe such a duty become the subject to…