Netflix CEO in the clear, social media wins SEC approval
- Shana Lynch
- Managing Editor- Silicon Valley Business Journal
- Email | Twitter | Google+
The SEC today gave its permission for companies using social media to announce important information as long as investors know which social media outlet will be used.
The SEC launched an investigation into social media use after Netflix CEO Hastings posted on his personal Facebook information about the company’s monthly online viewing, saying it had exceeded one billion hours for the first time.
That info didn’t appear in a press release or a filing with the SEC immediately following, and Hastings hadn’t used Facebook to convey that kind of data before. The company’s stock that day jumped from $70.45 to $81.72.
The SEC launched an investigation into the matter and came out today with the new rules. (It had approved news releases on company websites in 2008.)
“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement, in a statement. “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.”
The change could definitely make things easier for companies, which now have more outlets to get news out to different demographics.
The loser in this news? Traditional PR outlets like Business Wire and PR News Wire, which charge companies to release press releases on their behalf.
Shana Lynch is Managing Editor at the Business Journal. Her phone number is 408.299.1831.
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