Netflix Inc. and Chief Executive Officer Reed Hastings said they may face a U.S. Securities and Exchange Commission civil claim over a July Facebook post that coincided with the stock's biggest gain in almost six weeks.
SEC staff alleges Netflix and its CEO violated rules governing selective disclosure, according to a company filing yesterday. The July 3 post by Hastings said Netflix viewing “exceeded 1 billion hours” of videos in June. The shares rose 6.2 percent that day.
The SEC action highlights the potential for legal trouble when company executives like Hastings, who has more than 200,000 Facebook fans, communicate with the public via social media. Regulation Fair Disclosure, aimed at preventing selective reporting, was passed by the SEC in 2000, before the use of social-media outlets like Facebook and Twitter exploded.
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