Netflix and its outspoken CEO, Reed Hastings, have been hit with cease-and-desist warnings by the Securities and Exchange commission. The warnings allege that Hastings and his company violated provisions of the Regulation Fair Disclosure of the Securities Exchange Act in a Facebook post last summer.
The post in question took place on Hastings personal page in July, when he crowed about Netflix members streaming nearly a billion hours of content in the month of June. Netflix shares spiked that day, and the company did not issue a press release or SEC filing of the milestone, thus prompting the warning.
Hastings, of course, had his own take on the matter, saying the following to his investors in a response:
“The SEC staff believes that I gave you all ‘material’ investor information in my post and that we needed to instead release the June viewing fact ‘publicly’ with an 8-K filing or press release,”
He went on to defend the timing of the post, saying that the share price jump was well underway before he took to Facebook:
“While our stock rose the day of my public post, the increase started well before my mid-morning post was out, likely driven by the positive Citigroup research report the evening before . . . We remain optimistic this can be cleared up quickly through the SEC’s review process.”
Was there something shady going on here, or merely an overenthusiastic CEO bragging about his company’s latest achievement?
[via Home Media Magazine]