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 companyâs service in June. Now, the SEC may bring a civil suit against the company for improperly disclosing that information.
As the NYTâs Michael de la Merced reports, the regulator is âconcerned 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 timeâ.
The idea that a public post on a social networking site isnât up to the SECâs standards was met with a fair amount of derision. Business Insiderâs Jay Yarow called the move âridiculous…Hastings has 200,000 subscribers on Facebook, including journalists and analystsâ. New York Magazineâs Kevin Roose wrote that the âSEC isn’t showing a ton of awareness about the way news distribution works in 2012â.
Netflix responded to the allegations, claiming that the post was public and that the information in it wasnât material. Matt Levine finds those arguments wanting, especially since a lot of institutional investors arenât even capable of accessing Facebook while at work. Dan Primack concurs, pointing out that âinvestors in publicly-traded companies should not need to crawl all corners of the Internet to discover material informationâ.
So why did Hastings use Facebook to disseminate news about his company in the middle of the trading day? He hasnât presented an answer to that question, but we do know that he is on Facebookâs board, and bought 48,000 shares in August.Â – Ben Walsh
On to todayâs links: