Business Wire Calls SEC Stance a Disservice to InvestorsNoah Buhayar
Business Wire, the unit of Warren Buffett’s Berkshire Hathaway Inc. that distributes press releases, said the U.S. Securities and Exchange Commission is hurting investors by allowing the increased use of social media sites for posting financial information.
Guidance from the SEC “poses a disservice to the investment community, threatening increased fragmentation of price-sensitive information,” Business Wire said in a statement today. The stance also raises “privacy concerns as users are required to register to gain access to material news, security risks that may adversely affect market stability.”
The SEC said this week it will permit companies to use social media sites including ones run by Facebook Inc. and Twitter Inc. to communicate company announcements as long as investors have been told in advance where to look. The guidance came as part of a report detailing an investigation into Netflix Inc. Chief Executive Officer Reed Hastings, who in July posted monthly viewership results on his Facebook page rather than in an SEC filing or news release.
The SEC refrained from bringing an enforcement action against Hastings or Netflix, which runs a subscription service for watching television programs and movies, because rules around using social media for company disclosures had been unclear, the agency said.
Business Wire, founded in 1961 by Lorry Lokey, operates more than 30 bureaus around the world and competes with UBM Plc’s PR Newswire unit to help companies distribute news in compliance with securities regulations. Berkshire bought the company in 2006 after Business Wire CEO Cathy Baron Tamraz wrote to Buffett, asking him to consider acquiring the company.
“Social media can be a valuable part of the investor relations ecosystem, but it should not be the core,” she said in today’s statement. “We are wary of unintended consequences by limiting access to a single site that doesn’t have the security, reliability, or interface to reliably serve the entire investment community.”
Business Wire has 488 employees according to Berkshire’s 2012 annual report, which listed a total staff of about 288,000 across more than 80 units.