SEC Lets Reed Hastings Off the Hook for Facebook Post2 Apr, 2013 By: Erik Gruenwedel
The Securities and Exchange Commission April 2 approved the practice of corporate CEOs blogging, tweeting or posting on social media sites information about their companies.
“The SEC today … makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD), so long as investors have been alerted about which social media will be used to disseminate such information,” the SEC said in a statement.
The issue came to a head last July when Netflix CEO Reed Hasting posted on his Facebook page the fact the subscription video-on-demand service’s members had streamed more than 1 billion hours during the previous month. The news sent Netflix stock up sharply at the time.
That disclosure without a formal financial release to investors caught the eye of the SEC, which wondered if Hastings had violated fair disclosure laws by disseminating the news in a shout out to chief content officer Ted Sarandos during the Fourth of July weekend.
In December, the regulatory agency said it was considering filing formal charges against Hastings. Today, it said it would not seek “enforcement action” against the CEO.
“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” George Canellos, acting director of the SEC’s division of enforcement, said in a statement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”