STOCK EXCHANGE COMMISSION: COMPANIES CAN TWEET NEWS TO INVESTORS VIA SOCIAL MEDIA

Federal securities regulators told companies Tuesday they can legally use Facebook and Twitter to announce news to investors.

The long-awaited decision from the Securities and Exchange Commission on companies using social media to communicate with investors comes with a clarification: Investors must be notified ahead of time that companies will use social media to make announcements.

An SEC report out Tuesday answers up a longstanding question about whether social media can be used when a company announces news that is "material information" and has the potential to move its stock price. Regulation FD requires material information be disclosed at the same time to all investors.

The SEC's decision resulted from an inquiry by the SEC's division of enforcement into a Facebook posting by Netflix CEO Reed Hastings. On his personal Facebook page, Hastings first announced that Netflix' monthly online viewing had topped 1 billion hours. Netflix did not disclose the information in a press release or regulatory filing with the SEC.

The report today confirmed that the agency did not allege wrongdoing or recommend an enforcement action against Hasting.

Netflix is just one of several companies that has advocated that social media be a recognized form of communicating with investors.

And tech companies were also behind the move to allow company websites to be used to communicate with investors, which the SEC approved in 2008.

The SEC stresses that companies adhere to the same rules of disclosure that apply to other methods of delivery when using social media.

"Companies should review the Commission's existing guidance — it is flexible enough to address questions that arise for companies that choose to communicate through social media, and the guidance does so in a straightforward manner," Lona Nallengara, Acting Director of the SEC's Division of Corporation Finance said in a release.