Mike Isaac

Recent Posts by Mike Isaac

For Netflix and the SEC, a Facebook Share Is Public Enough (With Caveats, of Course!)

reed hastings netflixA note to CEOs of public companies: Be careful what you share on social networks.

Reed Hastings found that out the hard way, after he shared some company user numbers to his Facebook page last fall. The Securities and Exchange Commission wasn’t cool with that, saying at the time that Hastings had disclosed material information to only a subset of his shareholders by not simultaneously filing a disclosure with the SEC. For his sharing, Hastings was slapped with a nice little SEC investigation.

Fortunately for Hastings — and other share-happy CEOs — the SEC came back with a ruling on Tuesday, essentially saying a Facebook disclosure is public enough for stockholders to learn about any material info.

“Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news,” said George Canellos, Acting Director of the SEC’s Division of Enforcement, in a statement.

So basically, it’s cool to share material info on a social network. As long as you disclose just which network you’re sharing said material on, the SEC stipulates.

In other words, go ahead, Reed! Share all the data points you want about Netflix on your social networks. Just remember to point out to your shareholders that you’re doing it on Facebook, not Twitter. Or vice versa.

The whole point of this kerfuffle is that all stockholders should be privy to the same info at the same time. And typically, the SEC’s official website was the best place to go for that (or at least, the default place — “best” is arguable).

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” Canellos said.

But as I’ve argued in the past, and as the SEC seems to have recognized on Tuesday, social networks like Facebook and Twitter have massive reach, touching upward of 1.2 billion people on a monthly basis (if you combine the two networks). And in the tech community at least, PR email blasts and newswire releases are giving way to Facebook and Twitter blitzes, eschewing the traditional means of distributing information for other, arguably more effective methods.

(Dan Primack over at Fortune has some good thoughts on this as well, as he’s quite learned in the ways of Reg FD, the antiquated legislation that got Hastings in trouble in the first place.)

As for Hastings, he’ll be getting off scot-free, with the SEC dropping its investigation because of the novelty of social media and sharing practices.

I’m just waiting to see what happens when a CEO snaps an Instagram of their company’s 10-K.


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— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald