Netflix faces US penalty for CEO Facebook comments

Dec 07, 2012
Online video giant Netflix said Thursday it faces a possible penalty from US regulators for comments made by CEO Reed Hastings, pictured here in 2011, on his Facebook account about subscriber activity.

Online video giant Netflix said Thursday it faces a possible penalty from US regulators for comments made by its top executive on his Facebook account about subscriber activity.

The company made the disclosure in a regulatory filing as well as in another posting by CEO Reed Hastings.

The company said it received a "Wells Notice" from the SEC which means that some enforcement action is likely to be taken.

The civil action is possible because of Facebook postings by Hastings, which stated that its customers were spending around a billion hours per month watching .

Under SEC rules, any information important to shareholders should be disclosed publicly in a regulatory filing known as an 8K form.

"SEC staff informed us yesterday that they are recommending that the SEC bring a civil action against us for my July, one billion hour public post, asserting we violated 'Reg FD,'" the CEO said.

"This rule is designed to ensure that individual investors have equal access to information as large institutional investors, by prohibiting selective disclosure of material information."

Nonetheless, Hastings called this a "fascinating social media story" and defended his actions.

"We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he said on Facebook.

"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 one billion hours of viewing in June was not 'material' to investors."

Hastings said he was "optimistic this can be cleared up quickly through the SEC's review process."

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User comments : 6

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bottomlesssoul
3 / 5 (2) Dec 07, 2012
Sounds fair to me. Just an off hand comment.

Though all things considered, wow a billion hours spent with nothing to show for it except memories of old bugs bunny reruns. Is this where our species is headed?
dav_daddy
3 / 5 (2) Dec 07, 2012
Imagine how many hours they'd have if they carried even soft porn? The species is doomed!
Osiris1
2.3 / 5 (6) Dec 08, 2012
Seems Kiplinger has its tits in a wringer cuz' Hastings' supposed insider news was let out to the public and not just the well heeled heels that pay big bucks for 'exclusive insider info' from purveyers such as Kiplinger. This is so the rich .00001 percenters, the international criminal monopolists, could run massive pump and dump operations without the public knowing in time for we innocent small investor citizens to protect ourselves from the fraudsters that the government wants to shield and harbor.
IronhorseA
1 / 5 (1) Dec 08, 2012
"We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he said on Facebook."

Not everyone is on 'Facebook', valuing their privacy first. The point of the 8K form is so that All investors will get the information equally, rather than some hearing about it second hand after the big investors have already snapped up or dumped their shares.
Lurker2358
5 / 5 (3) Dec 08, 2012
The point of the 8K form is so that All investors will get the information equally, rather than some hearing about it second hand after the big investors have already snapped up or dumped their shares.


Naive fool.

All investors don't hear about it equally because normal people have other jobs.

Big investors do nothing but sit around watching stocks tickers and reports all day long.

Therefore, big investors are going to hear about anything important first anyway, whether 1 to 12 hours ahead of time (all or part of a work day,) a day ahead of others, or weeks ahead of others.
dacarls
not rated yet Dec 10, 2012
Or even quicker, like when the inside trader guy phones up his buddy, Bernie Madoff. These Greedheads have killed the American stocks and bonds investor: my father would have been astounded and appalled had he lived this long.

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