Netflix chief Reed Hastings boasted on Facebook about viewing numbers last summer, which the SEC says violates public disclosure rules
Netflix chief Reed Hastings is in hot water with the SEC after touting the streaming company's billion hours of viewing in a Facebook post last summer.
The Securities and Exchange Commission told Netflix it is weighing bringing a civil action for violating public disclosure rules, Hastings said Thursday.
In a post last July on his Facebook page, Hastings said Netflix monthly viewing exceeded 1 billion hours for the first time ever in the previous month. The release of those numbers caused Netflix's stock to spike, jumping from $67.85 a share on July 2, the day before Hastings' post, to $81.72 on July 5.
The SEC claims that information should have been disclosed in a press release or public filing, because it argues that some investors did not receive the news, putting them at a disadvantage.
Netflix counters that with some 244,000 subscribers to Hastings' page, the platform was a public one.
"We use blogging and social media, including Facebook, to communicate effectively with the public and our members," Hastings wrote Thursday.
He went on to say that the stock was climbing prior to his post on viewing hours and was partly attributable to a "positive" Citigroup research report the evening before.
"We think the fact of 1 billion hours of viewing in June was not 'material' to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month," Hastings wrote.
The company said it is hopeful that the problem will be cleared up by the SEC's review process.