Regulators from Wall Street are said to be looking to prosecute Netflix as they believe the company broke rules that do not allow companies to disclose certain information to a selective group of people.
Reed Hastings, the boss of Netflix, has said that he believes there is no case to answer as “posting to over 200,000 people is very public” in his opinion.
The post in question was posted on July 3 this year and simply read: “Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.”
The figures were available via this post to the 200,000 people who subscribe to the updates from Netflix and was also available to anyone else who might be interested as the page is open to all members of the public.
Exceeding 1 billion hours of views was a first for Netflix and the company wanted to let their fans know about it but according to Wall Street rules they should have first produced a press release or they should have lodged the news with the Securities and Exchange Commission (SEC). By releasing the news in this way it would have been available for Wall Street investors specifically and would then have been in line with the rules of fair disclosure.
Regulation Fair Disclosure requires all US firms to announce any important information about a company first to its investors to allow them fair time to be able to have a fair market for the shares.
The entire case has drawn attention to the changing way of companies disclosing information and the possibility of updating the rules thanks to the huge reach of social media in informing hundreds and thousands of people about developments in one quick post.
Reed Hastings from Netflix said: “We think posing to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers”.
Stanford Law School professor Joseph Granset told the Independent: “The evolution of social media presents the SEC with some very interesting regulatory challenges. But if they are worried about social media, there are ways for them to address that without threatening to sue Reed Hastings.
“They should have a rule making where they can ventilate these issues.”
Many within the industry have agreed with this opinion and see the changing face of modern business as being inextricably linked to social media and platforms such as Facebook and Twitter.