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SEC squints at Netflix CEO over Facebook posts

Apparently telling 200,000 subscribers is not public disclosure
Fri Dec 07 2012, 13:24
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VIDEO STREAMER Netflix CEO Reed Hastings could be in a spot of bother with the US Securities and Exchange Commission (SEC) over a Facebook post in which he announced that the service's customers exceeded one billion viewing hours in June.

Hastings announced to his 200,000 Facebook subscribers that the firm had surpassed the impressive milestone of one billion hours of video this past June, with the firm's shares rising over six percent on the day of the posting. Now Hastings has revealed that he might face an SEC civil claim over the post.

The SEC has rules about how publicly held companies must disclose information to the public and investors to try to level the playing field by offering everyone access to the same information at the same time. Apparently the SEC doesn't view Hastings' Facebook post, which was available to 200,000 Facebook members, as a public disclosure, something Hastings does not agree with. He also claimed that news of one billion viewing hours was not material information for investors.

Hastings said, "We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers." He continued, "We think the fact of [one] billion hours of viewing in June was not 'material' to investors, and we had blogged a few weeks before that we were serving nearly [one] billion hours per month."

Hastings tackled the issue of Netflix's stock price rising by claiming that it was already on the way up before his Facebook post. He claimed that it was "likely driven by the positive Citigroup research report" that was published a day prior to his Facebook post.

Ultimately the SEC needs to decide whether releasing information to 200,000 people on Facebook constitutes fair public disclosure of information. Hastings said, "We remain optimistic this can be cleared up quickly through the SEC's review process." µ

 

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