Netflix May Face Legal Action for Facebook Post

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A chief executive of Netflix, Reed Hastings, posted on the company’s facebook page that the monthly views exceeded 1 billion for the first time in history. Shares in the company rose after more than 244,000 social media subscribers saw the post. Now Netflix may face legal action at the hands of U.S. Regulators, for not posting the information in official forums such as a press release or an official regulator filing with the U.S. Securities and Exchange Commission (SEC). Companies are required to disclose information through such traditional channels when it has the effect of impacting the price, or value, or shareholder’s merchandise. Netflix received a Wells Notice from the SEC, which requests either a cease and desist from further postings, or an injunction against Hastings and Netflix for the post.

Hastings maintains that the post was not public disclosure, while the SEC considers over 240,000 people a number sufficient to constitute “the public.” After the post, shares in Netflix rose in price from $67.85 to $81.72 after three days’ time. Financial analysts ponder if regulation rules should be adjusted to incorporate the presence of social media in the stock market. Netflix may be subject to a fine, if the SEC pursues charges in the matter.

Source courtesy of BBC. Image courtesy of The Washington Post.