SEC vs. CEOs on Social Media
By: Daniel Jeffers - Search Engine Optimization - 2014
If you have a small investment in Netflix, are you moe likely to:
- Go to the Investment Relations page frequently?
- Subscribe to email updates from Netflix Investment Relations?
- Follow the CEO on Facebook?
Over 260,000 people are following Reed Hastings, the Netflix CEO, on Facebook. Many are probably investors, and a whole bunch are most likely reporters. Yet, when Hastings posted:
"Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When House of Cards and Arrested Development debut, we'll blow these records away."
The SEC sent him a "Wells Notice," claiming he had clued in a closed group of selected investors on something important, while hiding that information from small investors. 260,000 isn't closed or limited. In fact, his post probably reached a lot more small investors than anything ever posted on the investor website.
Admittedly, it is difficult to grapple with new methods of communication while upholding traditional protections against insider knowledge. But there needs to be a common sense rule. No doubt the SEC will catch up with Facebook over the next couple years, but by that time some new platform will be violating new rules without causing the type of harm the rules anticipate.