Neflix said Thursday that the Securities and Exchange Commission informed it that its staff is recommending civil action be brought against the company and CEO Reed Hastings. The reason: Hastings’ July 3 post in which he said Netflix’s online video viewing “exceeded 1 billion hours for the first time ever in June.”
The SEC says posting on Facebook doesn’t amount to fair public disclosure of information that is material to investors. Such information must be disclosed in a regulatory filing or news release, the SEC says.
Shares of Los Gatos, Calif.-based Netflix rose more than 6 percent on the day of Hastings’ Facebook post. On the first day of trading following the July 4 holiday, its shares rose another 13 percent.
Hastings used Facebook again Thursday to comment on the investigation, which he called a “fascinating social media story.” He argued that the information was not material to the stock price, had been disclosed and reported on earlier and that because he had 200,000 followers at the time, it was widely disseminated.
Hastings has been on the board of directors of Facebook Inc. since 2011 and as of Nov. 14 owned 72,639 shares.
“We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers,” he said in his post Thursday.