The US Securities and Exchange Commission has warned video streaming site Netflix that it may launch a civil suit against the company over a Facebook post made by CEO Reed Hastings in June.
Hastings posted on the social networking site that customers were enjoying "nearly a billion hours [of streamed video] per month”.
The SEC informed Netflix that this may have been in breach of ‘Regulation Fair Disclosure’, which obliges listed companies to provide "material" information to all investors at the same time. The implication is that investors who are not on Facebook were unfairly disadvantaged by not seeing Hastings’ post.
"The SEC staff believes that I gave you all “material” investor information in my post and that we needed to instead release the June viewing fact “publicly” with an 8-K filing or press release," Hastings wrote in a letter to investors yesterday.
"I want to note a few things," he wrote. "First, we think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers.
"Second, while we think my public Facebook post is public, we don’t currently use Facebook and other social media to get material information to investors; we usually get that information out in our extensive investor letters, press releases and SEC filings.
"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."
The SEC published guidelines on the use of the Internet by listed companies in 2009. It explicitly stated that it is the company’s responsibility to consider whether an online posting meets the the criteria of being "reasonably designed to provide broad, non-exclusionary distribution of the information to the public".