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