Netflix faces SEC probe over Facebook post

Written By limadu on Jumat, 07 Desember 2012 | 04.32

Netflix CEO Reed Hastings discloses in a Facebook post that a previous Facebook post has him in trouble with the SEC.

NEW YORK (CNNMoney)

In a Facebook posting on July 5, Hastings said that Netflix customers were viewing more than 1 billion hours of video content a month. The same information had appeared on the company's blog the month before. But in neither case did the company issue a formal press release or make a separate filing with the SEC disclosing the billion hour statistic.

The posting was widely reported and Netflix stock rose 13% the day of the posting.

On Thursday, Netflix disclosed in a new posting, an SEC filing and a news released that Hastings and the company received a Wells Notice from the SEC. The notice says the agency staff will recommend regulators institute a cease-and-desist proceeding and/or bring a civil injunctive action for violations of the agency's fair disclosure rules.

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Hastings said he's hopeful that the matter can be cleared up quickly through the SEC's review process.

"First, we think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he said. Hastings currently has 245,000 Facebook subscribers on his account.

"Second, while we think my public Facebook post is public, we don't currently use Facebook and other social media to get material information to investors; we usually get that information out in our extensive investor letters, press releases and SEC filings," Hastings added. "We think the fact of 1 billion hours of viewing in June was not 'material' to investors."

Related: Netflix inks Disney deal but no new films till '16

Netflix stock rose the day of his Facebook (FB) post on the topic, Hastings said, but the stock started rising before the post. He said he believed the rise was driven by a positive Citigroup research report the evening before.

Shares of Netflix (NFLX) fell 1% in after-hours trading following Thursday's disclosure. There were not yet any premarket trades Friday. To top of page

First Published: December 7, 2012: 7:06 AM ET


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