Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, April 2, 2013

SEC Will Not Charge Netflix CEO with Reg FD Violation; Issues Guidance on Use of Social Media

The SEC issued a Report of Investigation over whether Netflix and its CEO Reed Hastings violated Reg FD when Hastings posted corporate information on his personal Facebook page last July.  The SEC has determined not to pursue an enforcement action.  The report concludes that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation FD so long as investors have been alerted about which social media will be used to disseminate such information.

According to the report:

The SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. The SEC issued guidance in 2008 clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it. Today’s report clarifies that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.

The report goes on to state that :

although every case must be evaluated on its own facts, disclosure of material, nonpublic information on the personal social media site of an individual corporate officer — without advance notice to investors that the site may be used for this purpose — is unlikely to qualify as an acceptable method of disclosure under the securities laws. Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information.

http://lawprofessors.typepad.com/securities/2013/04/sec-will-not-charge-netflix-ceo-with-reg-fd-violation-issues-guidance-on-use-of-social-media.html

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