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Netflix investigated for CEO disclosures on Facebook

The SEC says numbers posted by CEO Reed Hastings on his Facebook page were not public enough to satisfy disclosure laws

How "public" are public Facebook posts?

Not enough for investors, according to the U.S. Securities and Exchange Commission. The SEC has launched an investigation into U.S. online video giant Netflix, after the company's CEO posted user numbers on his personal Facebook page, instead of an official release by the company.

Netflix CEO Reed Hastings, calling the case a "Fascinating social media story," said it dates back to a July posting he made on Facebook, in which he said over 1 billion hours of content were viewed by users in June. The company made no accompanying press release or financial filing, but Reed has over 200,000 subscribers that can view his public posts.

"SEC staff informed us yesterday that they are recommending that the SEC bring a civil action against us for my July 1 billion hour public post," Reed wrote on Facebook Thursday.

At the core of the case is whether the Netflix CEO's postings on his personal, but openly viewable, Facebook page are sufficiently "official" or "public" enough for investing laws. This is opposite to the more common dilemma around postings to Facebook and other social networks, in which individuals are punished for public messages or pictures that were meant for viewing by friends and family.

The SEC said in a separate filing posted earlier this week that it will recommend legal action against Netflix and possibly Reed for "violations of Regulation Fair Disclosure."

Reed argues that his Facebook postings, which are viewable by anyone, are sufficiently "public" that the company did not need to make an official filing on the subject. He also says that the billion-hour figure was not important enough to investors to require an official release from Netflix, noting that the company had posted a similar number on its blog a few weeks earlier.

In a June 4 posting to announce a new delivery network, the company's official blog noted that "Around the world, people are enjoying nearly a billion hours per month of movies and TV shows from Netflix."

In his latest Facebook posting, Reed said that he and his company "remain optimistic this can be cleared up quickly through the SEC's review process."

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