Image: socialable.co.uk
This was the ruling of the Securities and Exchange Commission (SEC) after an inquiry was filed following Netflix’s chief executive Reed Hastings' post in July 2012 on Facebook.
In the post, Hastings had announced that the movie and television streaming service had clocked one billion hours.
Many saw this as a violation of a rule that stipulates such important information must be disclosed to investors. But now the SEC ruling says there was no wrongdoing by the CEO.
"Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don't know that's where they need to turn to get the latest news," said the acting director of the SEC's enforcement division, George Canellos, in a statement.
The ruling also comes after a number of companies complained that the Regulation Fair Disclosure rule was outdated remaining behind technology as social media revolutionises the way they share news and attract customers.
The SEC has however in its new regulations stated companies should take steps to notify investors on their various sites ensuring that the investors subscribe to or join the right sites.
In Kenya the ruling ignited a conversation on Twitter led by communications expert Nuru Mugambi attracting the likes of financial markets guru Aly Khan Satchu.
@alykhansatchu can you believe this? talk about changing times..."#SEC says social media ok for announcements if investors alerted”
— Nuru Mugambi (@NuruMugambi) April 2, 2013
