Social Media Paper
RUNNING HEAD: SOCIAL MEDIA 1
SOCIAL MEDIA 7
Social media and its implications for users
Social media and its implications for users
Social media has become one of the most important tools for companies during the last years, it is used for posting important information that affect investors, stakeholders, and the rest of the public. However, if people do not follow the regulations stablished for its use, they can incur on a monetary sanction or lawsuit. Therefore, is necessary to know the implications and challenges that companies, and stakeholders faced when they use these platforms as a channel for communication.
Wealthfront Advisers LLC
One company that mislead information on social media was Wealthfront Advisers LLC; according to the SEC (2018), the robo-adviser company, based in California, “made false statements about a tax-loss harvesting strategy it offered to clients. Wealthfront disclosed to clients employing its tax-loss harvesting strategy that it would monitor all client accounts for any transactions that might trigger a wash sale – which can diminish the benefits of the harvesting strategy – but failed to do so. Over a period of more than three years during which it made this disclosure, wash sales occurred in at least 31 percent of accounts enrolled in Wealthfront’s tax loss harvesting strategy. The SEC’s order also found that Wealthfront improperly re-tweeted prohibited client testimonials, paid bloggers for client referrals without the required disclosure and documentation and failed to maintain a compliance program reasonably designed to prevent violations of the securities laws. (SEC, 2018).
Implications and challenges of using social media for companies
The implications of using social media for an organization can be positive and negative, depending on the use that companies give to it. The impact could be positive if the company is following the new trends that the market requires. Additionally, it will help the company to explore new marketing channels to communicate easily and faster with its consumers, investors and all of those interested in getting the commodities the company is offering.
Organizations also faced some challenges when they use social media platforms. In the article called ‘How to Overcome Top Social Media Challenges’, it is mentioned that lack of resources, no formal strategy, building a community of followers, and tracking results have become the hardest situations to deal with.
Lack of resources is the most common social media challenge in business, the main problem is that organizations do not have enough capital to invest and capacitate their current personal. To overcome this challenge, companies need to find some ways of maintaining their presences on social media, either incrementing its budget for marketing expenditures or partnering with influencers or other companies that can promote the product. (Herhold, 2018).
Another challenge is not having a strong social media strategy. Companies need to realize how important is to develop an effective participation on social media, by selecting the platforms that adjust to the business and will help it successfully. Herhold (2018) mentions that every platform is unique, therefore, the strategy should be different for each of them.
Some other risk that companies overcome with social media are: not giving the correct use to the platform; review what kind of content is going to be shared; changing and adapting the company policies so these can be adjusted to new formats; and, regulate and monitor employees activities on the media. (Cruz, 2019).
Stakeholders implications
On the other hand, stakeholders and investors also facing different challenges when they use social media. One of them is relying solely or partially to make decisions, because there could be some circumstances were the information is manipulated or has the intent to mislead the public, thus, is important to find an official communication from the company that gives more detail about what is on social media. Additionally, stakeholders need to know about what kind of information is going to be shared on these platforms.
Position of the SEC related to using social media for company related information. When an organization decides to enter and interact with the public via social media platforms, it is required to follow the regulations and procedures stablished.
On 2013, the SEC published a report stating that companies can use social media platforms as Facebook and twitter, to release important information following the Regulation Fair Disclosure (Regulation FD), only if the investors have been told about which platform is going to be used to display such information. This rule includes the company social media profile, but not the personal social media site of an individual corporate officer, because is not considered an adequate channel for communicating company related information.
Regulation FD is necessary to ensure that companies will share information in a way that every investor can have access to it at the same time. With this regulation, the SEC can monitor and ensure that companies are using social media correctly and without any preference.
Social media users are exposed to challenges and risks when they use the platforms, therefore it is essential to give them a correct and effective use, trying to follow all the regulations and implementing the security tools and safeguards to reduce the risk of hacking and fraudulent behavior. Stakeholders should be aware of the company activities on social media and try to get official releases from the organization when they need to take important decisions.
\
Reference
Cruz, R. (2019, September 3). SEC Scrutiny Highlights Risks of Social Media. Retrieved from: http://www.rmmagazine.com/2019/09/03/sec-scrutiny-highlights-risks-of-social-media/
Herhold, K. (2018, February 8). How to Overcome Top Social Media Challenges. Retrieved from: https://themanifest.com/social-media/how-overcome-top-social-media-challenges
Securities and Exchange Commission. (2018, December 21). ADMINISTRATIVE PROCEEDING. File No. 3-18949. In the Matter of WEALTHFRONT ADVISERS, LLC, f/k/a WEALTHFRONT, INC. Retrieved from: https://www.sec.gov/litigation/admin/2018/ia-5086.pdf
Securities and Exchange Commission. (2013, April 2). SEC says social media OK for company announcements if investors are alerted 2013-51. Retrieved from: https://www.sec.gov/news/press-release/2013-2013-51htm
Securities and Exchange Commission. (2018, December 21). SEC Charges Two Robo-Advisers With False Disclosures. Retrieved from: https://www.sec.gov/news/press-release/2018-300