Jon Corzine Still Walks Free, but the SEC is Investigating Netflix Over a Facebook Post
Netflix CEO Reed Hastings is under investigation by the Securities and Exchange Commission for posting information about the company on his Facebook page.
In a Facebook posting on July 5, Hastings said that Netflix customers were viewing more than 1 billion hours of video content a month. Information that the company was approaching 1 billion hours had appeared on the company's blog the month before. But in neither case did the company issue a formal press release or make a separate filing with the SEC disclosing the billion hour statistic.
The posting was widely reported and Netflix stock rose 13% the day of the posting.
On Thursday, Netflix disclosed in a new posting, an SEC filing and a news release that Hastings and the company received a Wells Notice from the SEC. The notice says the agency staff will recommend regulators institute a cease-and-desist proceeding and/or bring a civil injunctive action for violations of the agency's fair disclosure rules.
The SEC's investigation appears to center on whether Netflix is properly making company information public. Netflix's Facebook page is very public, though, with more than 250,000 subscribers.
Companies are required to make public information that is considered "material" to shareholders. Typically, companies will do that by filing that information to the SEC, but businesses are also allowed to bypass the SEC by posting information on their websites or by issuing a press release.
I don't know. Seems like the SEC is trying to either justify its existence, or is not yet hip to just how prolific social networking really is.
I mean, if they're really joneing to go after someone who caused real damage to lots of other people...here ya go.