Counterparties: 43 words you can’t say on Facebook

By Ben Walsh
December 7, 2012

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Facebook is unlikely to become your go-to source for corporate announcements any time soon. In July, Netflix CEO Reed Hastings said on his Facebook page that viewers had watched over one billion hours of video using his company’s service in June. Now, the SEC may bring a civil suit against the company for improperly disclosing that information.

As the NYT’s Michael de la Merced reports, the regulator is “concerned that the post violated the Regulation Fair Disclosure rule…which requires a company to announce information that is material to its business to all investors at the same time”.

The idea that a public post on a social networking site isn’t up to the SEC’s standards was met with a fair amount of derision. Business Insider’s Jay Yarow called the move “ridiculous…Hastings has 200,000 subscribers on Facebook, including journalists and analysts”. New York Magazine’s Kevin Roose wrote that the “SEC isn’t showing a ton of awareness about the way news distribution works in 2012”.

Netflix responded to the allegations, claiming that the post was public and that the information in it wasn’t material. Matt Levine finds those arguments wanting, especially since a lot of institutional investors aren’t even capable of accessing Facebook while at work. Dan Primack concurs, pointing out that “investors in publicly-traded companies should not need to crawl all corners of the Internet to discover material information”.

So why did Hastings use Facebook to disseminate news about his company in the middle of the trading day? He hasn’t presented an answer to that question, but we do know that he is on Facebook’s board, and bought 48,000 shares in August. – Ben Walsh

On to today’s links:

Strong Statements
Mike Bloomberg says US immigration policy is “national suicide” – NY Daily News

Primary Sources
US economy beats expectations and adds 146,000 jobs in November, unemployment drops to 7.7% – BLS

Profiles
The man who looted the Congo – Bloomberg

Long Reads
Google accidently built a social network users loved, and replaced it with Google+ – Buzzfeed

Popular Myths
“Obama doesn’t want to punish success any more than a pair of swashbuckling centrists do.” – Matthew O’Brien

Alpha
Generate astonishing returns in 2013 by investing in Chipotle gift cards – Thought Catalog

Oxpeckers
Thank the lord the NYT isn’t the newspaper of record – Jack Shafer

Regulations
Interns of the world unite! You have nothing to lose but your unpaid experiences – Guardian

Servicey
“We’re offering the Mayan ‘End of the World’ Auto Loan Special.” – Financial Brand

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Comments
2 comments so far

If institutional investors simply don’t or won’t go to a website to get info, why is that an FD violation?

FD means equal access to everyone, it doesn’t mean you must make the horse drink.

When an institutional investor gets access to a site before hobbyist investors, is that an injustice too?

Hastings was foolish to post this. But it was in a public forum and if investors simply don’t look there it’s really their fault. They have the technological capability of doing so.

Posted by stereoscope | Report as abusive

As a non-facebook user, I find this absurd. What if they only disclosed the information to ten newspapers, and they’re not the ones that I read? It’s impossible to make sure everyone hears the news at the same time, so why discriminate against one news channel?

Posted by KenG_CA | Report as abusive
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