Netflix CEO Reed Hastings is under investigation by the Securities and Exchange Commission because of a Facebook post the CEO made in July.
On his personal Facebook page, Hastings announced that Netflix had surpassed one billion hours of streaming video in a single month, the first time Netflix has reached that milestone in its short lived history. SEC officials now claim that disclosing that information only to his Facebook followers may have been a violation of fair disclosure laws.
The SEC could choose to go after Hastings and Netflix in civil court.
The Facebook post was not a secret. Hastings’ Facebook account post was seen by more than 200,000 followers. Even with a post seen by hundreds of thousands of followers, the SEC believes it may still be “selective disclosure” of material information.
Netflix officials were quick to point out that the company hinted at the one billion milestone before it was actually posted to Reed Hastings’ Facebook page. The video streaming service also claims that revealing such numbers is not “material” to investors who prefer to know about subscriber numbers both on the instant video streaming and DVD/Blu-ray rental sides.
Netflix says it is “optimistic that this can be cleared up quickly through the SEC’s review process.”
This isn’t the first time Netflix officials have come under fire for their business practices. Many investors were angered when company officials sold millions of Netflix shares before the company lost a large percentage of its users during price increases for its services.