Netflix CEO Reed Hastings Warns That Regulators Are Investigating His Facebook Posts
The SEC doesn't like the way Hastings disclosed that customers of the company he co-founded streamed 1 billion hours of content in a month.
Netflix CEO Reed Hastings on Thursday warned that he may have violated SEC regulations demanding that investors have equal access to information.
At issue is Hastings’ penchant for sharing information about Netflix on his Facebook page. In particular, some staffers at the SEC found it objectionable when Hastings disclosed that in July Netflix notched more than a billion hours of streaming.
Because of that Facebook posting, according to a regulatory filing on Thursday, staff from the Securities and Exchange Commission may recommend that the entity “institute a cease and desist proceeding and/or bring a civil injunction against Netflix and Mr. Hastings.”
While Thursday’s regulatory filing is brief, Hastings discussed the issue at length, ironically, in a Facebook post.
Hastings explained that the SEC didn’t mind when he announced on Facebook that Netflix users streamed “nearly” 1 billion hours of content in June, so he figured the SEC shouldn’t object to his Facebook post a month later that Netflix surpassed 1 billion in July.
He also took issue with the SEC’s assertion that a Facebook posting read by potentially 200,000 people who follow him, including many journalists, doesn’t qualify as a “public” disclosure.
The CEO also said that the SEC rule only applies to “material” information that would move the stock price one way or another. Therefore, his Facebook back then didn't violate any rules.
“While our stock rose the day of my public post, the increase started well before my mid-morning post was out, likely driven by the positive Citigroup research report the evening before,” Hastings wrote Thursday on his Facebook page.