Netflix Facebook post tests fair disclosure rules

Dec 06, 2012, 6:03 PM EST
Netflix CEO Reed Hastings speaking at the Facebook f8 conference on September 22, 2011 in San Francisco, California.
Getty Images/Justin Sullivan

In a case that could test social media postings by officers of publicly listed companies, the U.S. Securities and Exchange Commission is bring a civil suit against Netflix and its chief executive Reed Hastings in connection with a Facebook posting he made in July. At question is whether the post violated regulations on fair disclosure that require material information about a company to be disclosed to all shareholders at the same time. Hasting posted on Facebook in early July that Netflix customers had watched more than 1 billion hours of videos on his company's service in June; he had previously written on Netflix's web site that monthly veiwing was approaching that number. The SEC will have to decide if the change constitutes material information, and, if it decides it is, whether posting to Facebook counts as selective disclosure.