Tags: Netflix | Chief | SEC | Facebook

Netflix Chief Faces SEC Action on Facebook Post

Thursday, 06 Dec 2012 08:05 PM

 

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Netflix Inc. and Chief Executive Officer Reed Hastings were told by the U.S. Securities and Exchange Commission staff that they may face a civil claim over statements he made on Facebook about usage of the service.

The staff is alleging Netflix and its CEO violated Regulation Fair Disclosure by making selective disclosure of material information, according to a company filing Thursday.

Hastings said in the filing the SEC is questioning his July 3 Facebook posting, seen by 200,000 followers, in which he said customers watched “over 1 billion hours” of videos on Netflix in June. He had previously posted on his company blog that members were viewing “nearly a billion hours per month.”

“We think the fact of 1 billion hours of viewing in June was not ‘material’ to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month,” Hastings said in the filing Thursday. “We remain optimistic this can be cleared up quickly through the SEC’s review process.”

Netflix, based in Los Gatos, California, fell 1 percent to $85.27 in extended trading. The shares gained 3.4 percent during the regular session in New York and have advanced 24 percent this year.

Jonathan Friedland, a Netflix spokesman, said the company had no additional comment.

Company executives are increasingly using social media as a tool to communicate with customers and investors. On Tuesday, Elon Musk, chairman and CEO of Tesla Motors Inc., said on Twitter his electric vehicle company was cash-flow positive last week.

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“Am happy to report that Tesla was narrowly cash flow positive last week,” Musk, 41, wrote to his almost 113,000 followers. “Continued improvement expected through year end.” Musk’s message, which was re-posted more than 600 times by Twitter users, provided no additional information.

Tesla, which hasn’t turned a quarterly profit, is racing to expand production of the rechargeable Model S sedan at its factory in Fremont, California. The base price of the car will increase by $2,500 to $59,900 on Jan. 1, the Palo Alto, California-based company said last week in a statement.

Reg FD is a rule passed by the SEC in an effort to prevent selective disclosure by public companies to market professionals and certain shareholders.

© Copyright 2014 Bloomberg News. All rights reserved.

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