Facebook Blues: Netflix CEO Reed Hastings' Bragging on Facebook Lands Him in Hot Water With U.S. Stock Regulators. Did Hastings Say Something He Shouldn't Have? Bloomberg
Netflix Chief Executive Officer Reed Hastings may face a civil action by the U.S. Securities and Exchange Commission over a Facebook post, reports Bloomberg News.
The post coincided with the stock's biggest gain in almost six weeks, and the SEC is alleging Hastings violated selected disclosure rules, the report notes.
The July 3 post by Hastings said that viewing on the streaming service "exceeded 1 billion hours" in June, and the shares rose 6.2% that day.
Regulation Fair Disclosure went into effect in 2000, before the explosion of social-network services such as Twitter and Facebook. "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," the article points out.
The potential civil claim from the SEC was disclosed in a company filing. In it, Hastings wrote, "We think the fact of 1 billion hours of viewing in June was not ‘material’ to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month." He added that he was "optimistic" the issue would be quickly cleared up.
The fair disclosure regulations require publicly traded companies to use press releases or another "non-exclusionary method" to issue news that could impact investors or the company's stock.