Netflix probed over Facebook post

Reed HastingsNetflix is facing scrutiny from US government regulators for a Facebook post by its chief executive in July that may have boosted the online video company's stock price.

Neflix said that the Securities and Exchange Commission informed it that there has been a recommendation that civil action be brought against the company and it's chief executive Reed Hastings after Hastings posted on July 3 that Netflix's online video viewing "exceeded 1 billion hours for the first time ever in June".
The SEC says posting on Facebook does not amount to fair public disclosure of information that is material to investors.

Shares in Netflix, which is based in Los Gatos, California, rose more than 6 percent on the day of Hastings' Facebook post. On the first day of trading following the July 4 holiday, its shares rose another 13 percent.

Hastings has used Facebook again to comment on the investigation, which he called a "fascinating social media story". He argued that the information was not material to the stock price, had been disclosed and reported on earlier and that because he had 200,000 followers at the time, it was widely disseminated.

Hastings has been on the board of directors of Facebook since June 2011 and as of November 14 owned 72,639 Facebook shares.

"We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he said in his post.

The SEC says Hastings' July post contained material investor information that must be disclosed in a regulatory filing or news release. But Hastings said similar information was disclosed on the company blog in June.

On June 4, the blog states that Netflix's online customers were "enjoying nearly a billion hours per month" of streaming video. That announcement was also not put in a press release or an SEC filing.
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