Netflix Inc. and chief executive officer Reed Hastings said they may face a Securities and Exchange Commission civil claim over a July Facebook post that coincided with a big gain in the company’s stock price.
SEC staff alleges Netflix and its CEO violated rules governing selective disclosure, according to a company filing. The July 3 post by Hastings said Netflix viewing “exceeded 1 billion hours” of videos in June. The shares rose 6.2 percent that day.
The SEC action highlights the potential for legal trouble when company executives like Hastings, who has more than 200,000 Facebook fans, communicate with the public via social media. Regulation Fair Disclosure, aimed at preventing selective reporting, was passed by the SEC in 2000, before the use of social-media outlets like Facebook and Twitter exploded.
“This may be a case when the SEC needs to play catch-up,” said Charley Moore, executive chairman and founder of San Francisco online legal services firm Rocket Lawyer. “Disclosing information to 200,000-plus Facebook users is basically the same as issuing a press release.”
Read also:
Netflix Shows Facebook Is Not the Internet (Yet) (Businessweek)
Social Media and Reg FD: Can You Use Facebook to Disclose? (Wall Street Journal (blog))
The SEC Lives In Flatland If It Zaps Netflix's Facebook Update (Forbes)
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