Netflix forces SEC scrutiny over Facebook write-up.

Netflix and it is chief executive Reed Hastings could face a civil action for any Facebook post that US Sec and Exchange Commission staff allege violated disclosure rules that want companies to release important information to all investors as well.

On July 3, Mr Hastings put up a public Facebook post to a lot more than 200, 000 Facebook followers, announcing that Netflix members had watched a lot more than 1bn hours for initially in June. The message has since received a lot more than 250 likes and was shared a lot more than 30 times, but the company would not issue a press release or file a document with the SEC about the news.

Netflix disclosed within a SEC filing on Thursday that this company and Mr Hastings acquired received a Wells notice from SEC staff, warning of the particular agency's intentions to file municipal charges for violating Regulation Reasonable Disclosure. The rule bans the particular selective release of material info.

SEC staff will present the way it is to commissioners, who will vote on if to sue the company. The case may very well be watched by corporations that increasingly tap social networking to disseminate information.

"SEC personnel questions a Facebook post. Fascinating social networking story, " Mr Hastings said within a regulatory filing that he in addition posted to his Facebook page.

He argued that the company considered a post to a lot more than 200, 000 people as "very public", particularly because a lot of the executive's Facebook subscribers were being reporters and bloggers. He added that even though the company believed that the write-up was public, the 1bn viewing hours fact was not "material" to investors because it previously had signalled within a blog post that it has been approaching the milestone. He said the corporation typically released important information by means of investor letters, the press releases and SEC filings.

Mr Hastings noted that while Netflix stock has been on the rise side  for the day of the post, the climb started prior to the posting occurred and likely was sparked by the positive Citigroup research report.