Securities Law Prof Blog

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

Friday, December 7, 2012

Netflix and CEO Receive Wells Notices About Facebook Postings

Netflix disclosed in an 8-K filing that the company and its CEO Reed Hastings have received Wells notices from the SEC staff, indicating that it intends to recommend to the Commission that it institute a proceeding against them for violations of Regulation FD, in connection with a July posting by Hastings on his Facebook page about Netflix that members were enjoying over a billion hours per month of Netflix.  The comment was  picked up by the press and widely reported; the company did not issue a press release or file an 8-K at the time.

Hastings outlines two principal defenses to the SEC charges.  First, a posting to over 200,000 people is public.  Second, the fact of 1 billion hours of viewing in June was not "material" information, particularly since there had been an earlier blog that the company was serving "nearly" 1 billion per month.

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