Finance expert Mike Periu on a possible SEC civil suit against Netflix for a social amplification on Facebook that positively affected their stock price
On July 3rd, the CEO of Netflix Reed Hastings posted a message on Facebook indicating that users of the online video-streaming service had surpassed 1 billion hours of viewing. The stock price of the company rose 6.2 percent that same day. The SEC apparently wasn’t too happy about this. They have sent the company a Wells Notice, which indicates that sufficient wrongdoing has occured to warrant a civil lawsuit. Why would the SEC sue over a Facebook post? In 2000, the SEC announced Regulation Fair Disclosure or Reg FD which requires that material information from publicly-traded companies be disseminated to investors in a “non-exclusionary” way like a press release. This is to prevent some investors from having more information than others in order to make investment decisions. It appears that even though Netflix has over 200,000 followers on Facebook, a social media post doesn’t qualify as non-exclusionary. With more company CEOs using social media, this may become a test case to determine if social media accounts like Facebook and Twitter violate Regulation FD or if they will be added to the list of approved methods of communications.
About small business finance expert Mike Periu
Mike Periu has experience in small business finance. He founded Proximo, LLC a company that offers consumer and small business training services focused on technology and money.
Mike Periu teaches individual empowerment through entrepreneurship and financial literacy. He has appeared 500+ times on television and radio. Visit the Reach and Media pages of his website to learn more about where he has appeared.
You can read more of Mike’s articles on his blog or at American Express OpenForum, Yahoo! Finanzas and the Huffington Post.
Mike has a degree in International Business and Finance which he received at Georgetown University in Washington, DC. He received a Fellowship from the Kauffman Foundation for the Labs for Enterprise Creation program in Kansas City.
