Netflix CEO Reed Hastings escaped enforcement action by the SEC over his Facebook posts detailing information about the company that wasn’t reported in the company’s public filing, the government agency announced today.
Hastings’ actions came under scrutiny after Hastings posted in June on his personal Facebook page stating that Netflix’s monthly online viewing had exceeded one billion hours for the first time and then the company failed to include that in a filing. The SEC then began an investigation to clarify how Hastings’ post meshed with the agency’s current rules over social media. “Recognizing that there has been market uncertainty about the application of Regulation FD to social media, the SEC issued the report of investigation pursuant to Section 21(a) of the Securities Exchange Act of 1934,” the SEC wrote in its decision today.
Instead of penalizing Netflix, the agency clarified rules of social media for companies. Information about a company should be distributed so it’s available for all investors and the general public, the agency clarified. So if it can be reasonably assumed that shareholders can access the social media channels used to spread information, it is perfectly acceptable.
“Companies should review the Commission’s existing guidance — it is flexible enough to address questions that arise for companies that choose to communicate through social media, and the guidance does so in a straightforward manner,” Lona Nallengara, Acting Director of the SEC’s Division of Corporation Finance, said in a statement.
Last year, Hastings called the SEC investigation a “fascinating social media story” on his Facebook page.NM