The Securities and Exchange Commission is thinking about filing a suit against Netflix (NASDAQ:NFLX) CEO Reed Hastings over a post on Facebook (NASDAQ:FB) in which he announced that his company streamed over 1 billion hours of video for the month for the first time.
Sounds harmless, right? But the SEC claims the disclosure was a violation of the Fair Disclosure rules; apparently, he should have used a more traditional approach, such as a press release.
Hastings argues his Facebook page should qualify because it has more than 200,000 subscribers (and he also wrote a blog post). He also says the disclosure was not “material.”
It seems like the SEC could have better things to do, such as trying to find those who are ripping off investors and engaging in insider trading. Keep in mind that when Hastings disclosed his news, it was quickly spread across the web (and the stock price responded with a 6% boost).
Perhaps the SEC should use this as an opportunity to recognize that social media can be a legitimate mechanism to disclose corporate information — not another technicality to use resources for litigation.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.