The spreading of information on Twitter or Facebook that affects the stock price is getting ever more tricky in Switzerland. In cases of unusual stock market moves, the exchange regulator is increasingly monitoring the social media, says Katharina Ruedlinger, manager at SIX Group.

Katharina Rüdlinger, are there any specific rules on the use of social media in the regulations on ad-hoc publicity?

No, social media are mentioned neither in the regulation on ad-hoc publicity nor in the commentary to the regulation. Thus there's no written rule on if and when Twitter and Facebook are allowed or forbidden to use for issuers or their employees.

We have to apply the rules and the commentary on the possible conduct of issuers and employees as they stand.

What does a company have to do if it discovers that information, which is potentially relevant to the share price, has reached the social media from within the company?

If such information from an issuers reaches the social media by accident or because of a lack of care, the facts need to be published immediately in the form of an ad-hoc information based on the rules of publication of ad-hoc publicity.

What about rumors spread by third parties in social media?

The issuers is not obliged to comment on rumors, or false information, in social media with an ad-hoc information.

If it does so, it makes sense to do so in the form of an ad-hoc information according to the guidance on ad-hoc publicity. But, according to common practice established by the sanctioning committee of the stock exchange, the issuer can also do it in another form.

Has there ever been a sanction in Switzerland for a breach of duty in connection with the social media?

No, not yet. There's a famous case from the U.S. though: Reed Hastings, CEO of Netflix, in July of 2012 said on Facebook that the hours of video streaming in June 2012 had exceed the billion-hour-mark for the first time.

Netflix shares jumped. SEC, the U.S. stock exchange regulator, in December 2012 announced it would consider sanctioning Reed Hastings.

And what happened?

SEC in April 2013 said that if investors of a listed company have been informed about which social media are being used to publish important information, companies are allowed to use them for the purpose.

In Switzerland, the comment on Facebook by Reed Hastings would have been a breach of conduct according to the rules of ad-hoc publicity. A procedure to sanction would have been launched.

Is the SIX Exchange Regulation monitoring the twittering and commenting in the social media in any way?

We are aware that a lot of things take place in the social media involving our 245 issuers. A permanent and comprehensive monitoring of those activities would however be very expensive. We are analyzing on a random basis and have started monitoring the background of unusual moves of stock prices in the social media.

Occasionally, we receive cues from within the market or our SIX units that we follow up. But we will certainly have to devote more effort to the communication on the social media in future because it is still growing strongly.

What do you expect listed companies to do to prevent breaches of the code of conduct on ad-hoc publicity in the social media?

Companies ought to define how managers and all its employees deal with price-relevant information in the social media. For that purpose, all the involved need to be told about the rule on ad-hoc publicity and made aware of the importance of adhering strictly to those rules.

For international companies it means doing so at all its branches. If there is still a leak of a price-relevant information to the social media, employees need to be obliged to tell the company immediately. To allow the mechanism on an ad-hoc publication to be launched with immediate effect, there has to be an emergency plan.

Furthermore, in the cooperation with external service providers or in negotiations with unlisted companies, all involved personnel have to be made aware of the ad-hoc information regulation.

Katharina Rüdlinger, a lawyer, has been working for the Swiss stock exchange for the past eight years. She's in charge of the Corporate Disclosure unit at SIX Exchange Regulation and responsible for the enforcement of ad-hoc publicity regulation at the listed companies.

Despite the rapid expansion of communication on Twitter or Facebook, the current rules on ad-hoc publicity and the commentary make no mention of social media. An extensive version of the interview was published in «Tensid EQS Evolvere Blog».