Facebook has over 500 investor groups that include tens of thousands of members – and the SEC wants to make friends. The SEC’s Office of Investor Education and Advocacy will appear on Facebook by year’s end, according to director Kristin Kaepplein, who has been exploring social media applications as a way for the SEC to improve communications with the investing public.
“The Internet is the ideal medium for reaching out to a large number of private investors and better understand their issues and concerns,” says Kaepplein. The office exists to help retail investors with education, fraud protection, and advocacy, she explains. “Social networking applications are a great way to learn what investors are thinking, what matters to them, what information they need, and what their hot buttons are.”
Facebook users shouldn’t expect a one-on-one “write on my wall” type of dialog with SEC representatives, but the SEC’s Facebook page will contain headlines, alerts, and short blurbs to capture viewers’ interest and link them to information and resources. “This is also a way for us to reach out to those people who might be impacted by an SEC rule change, to let them know it’s coming, and let them have a chance to comment,” says Kaepplein.
The SEC has produced a lot of unbiased consumer education materials on investing and securities markets, and Facebook can be used to help more people find it. Right now, says Kaepplein, investors have a lot of questions about the credit market and how to monitor it. “We could alert the people on Facebook to both the issues and solid information. For example, they might like to know about the SEC’s new publication that describes what a spread is, and explains what the VIX is and why they should care.”
Facebook may also cut down on phone calls to the SEC by providing 24-hour access to FAQs and topical issues. “We get tens of thousands of calls each year from individual investors,” says Kaepplein. The questions are often based on what’s happening in the day’s market, so Kaepplein follows the news to prepare. “We’re getting a lot calls now for information about the Treasury’s money market insurance program or what happens in a bankruptcy proceeding,” she said. (Calls can often be expected on whatever topic Jim Kramer of CNBC is talking about that day).
Facebook is just one piece of the SEC’s online strategy, which is about reaching not just Facebook’s retail investors, but reaching millions more. “The Internet is the only efficient channel to do this,” says Kaepplein, “so the big goal of the Office of Investor Education and Advocacy is to exploit our potential to reach investors online.”
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