The Corporate Law Group

Social Media Securities Disclosure


The SEC’s Division of Enforcement launched an investigation of Netflix after its CEO Reed Hastings posted on his personal Facebook page that Netflix’s monthly online viewing had passed one billion hours for the first time.  Netflix didn’t report this information to investors through a press release or 8-K.  Neither Hastings nor Netflix had previously used Hastings’ Facebook page to announce Netflix metrics, and no one told investors they might do so.  Netflix’s stock price rose over 10% during the next day.  Regulation FD did away with private analysts calls, and requires companies to make publicly available as soon as possible any information disclosed privately.  Disclosure can be by press release or 8-K filing.  Public companies frequently make 8-K filings following annual meetings since execs sometimes spill beans not already public.  In the investigative report the SEC said that use of social media to disclose company information was OK as long as it has alerted the public that it might do so through a specific outlet.  Websites already serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it.  The SEC did not initiate an enforcement action or allege wrongdoing by Hastings or Netflix.  We were happy to see common sense prevail.

— Paul Marotta 

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