December 7, 2012
Some chief executives are getting themselves into trouble over social media messages, The Wall Street Journal reports. The Securities and Exchange Commission may bring suit and a cease-and-desist proceeding against Netflix and its CEO Reed Hastings, because of a Facebook post he wrote in July that said Netflix had exceeded 1 billion hours of video streaming in a month for the first time. The post may have violated rules of fair disclosure for investors, the Journal reports.
In a Facebook post on Thursday, Hastings said that further disclosure wasn’t necessary at the time because he had more than 200,000 subscribers to his Facebook page, making it a “very public” forum. Netflix shares jumped 6.2 percent the day he made the disclosure.
Hastings isn’t the first executive to draw scrutiny for his comments on social media. Earlier this year, Gene Morphis, chief financial officer of the retail chain Francesca’s Holdings, was fired after revealing company information on Facebook and Twitter. This summer, Adam Smith, CFO of Vante, a company that makes medical devices, lost his job after uploading a video to YouTube showing him berating a Chick-fil-A employee. But in the case of Hastings, sharing company information with 200,000 followers on Facebook “pretty clearly squares with the law,” says Joseph Grundfest, a law professor at Stanford University. — Greg Beaubien
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