SEC misguided in stand over Netflix CEO’s Facebook post

The Securities and Exchange Commission needs to update its ‘fair disclosure’ rules to keep pace with social media’s proliferation and real-time dispensation of information, the author asserts.

The Securities and Exchange Commission is considering taking action against Netflix and its CEO, Reed Hastings, because of a Facebook post.

The agency says that the update to Hastings’ 200,000+ subscribers, in which he said, “members had enjoyed over 1 billion hours in June,” violated the SEC Regulation Fair Disclosure (Reg FD) rule.

The SEC is charged with making securities trading fair, and since Netflix is a publicly traded company, the SEC has oversight. Reg FD is the SEC rule that says when a company discloses something of material importance (something that might affect the stock price) that the information needs to be sent to everybody at once.

According to the SEC: “Regulation FD provides that when an issuer discloses material nonpublic information to certain individuals or entities—generally, securities market professionals, such as stock analysts, or holders of the issuer’s securities who may well trade on the basis of the information—the issuer must make public disclosure of that information.”

The SEC is completely wrong

The issue is not with Netflix. It is with the dinosaurs at the SEC. This is not a stock story. It is a real-time communications story.

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