Counterparties: 43 words you can’t say on Facebook
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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: