Netflix Announcement Forces SEC to Change Law and Get With the 21st Century

Apr 3, 2013  •  Post A Comment

An announcement that Netflix made last July on its Facebook page has forced the Securities and Exchange Commission to change one of its regulations, reports Forbes.

According to the report, the brouhaha "stems from when Netflix CEO Reed Hastings last July posted on his personal Facebook that, for the first time in company history, viewers had consumed 1 billion hours in a month." The announcment was credited with causing movement in Netflix’s stock price. Thus, Forbes says, "The SEC then sent a Wells Notice to Netflix — a signal a company is being investigated and could face charges — but since concluded it didn’t need to punish Netflix."

After further thinking about the incident, Forbes reports, the SEC has announced that companies can "announce news through social media, provided investors know to expect it, regulators said this afternoon. The clarification updates existing wording, Regulation Fair Disclosure, that sanctioned corporate websites as an appropriate means to distribute information. The update will probably force links to corporate Facebook, Twitter and LinkedIn accounts to quickly appear prominently on investor-relations pages. Else businesses with tweet-happy executives could soon run afoul of regulators."

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