SEC considers suing Netflix over Facebook post

The Securities and Exchange Commission is considering whether to sue Netflix for a Facebook post by CEO Reed Hastings that revealed company financial information.

The SEC is concerned that the post violated the Regulation Fair Disclosure Rule, which requires companies to announce material information to all investors at the same time.

Netflix disclosed the SEC investigation on Thursday.

The probe is focused on Hasting's public Facebook post from July, in which he touted the fact that Netflix subscribers had watched more than one billion hours of video in the previous month.

Media reports cited Hasting's post, and Netflix stock jumped following the announcement.

Companies generally announce news through press releases or regulatory filings to avoid violating the disclosure rules.

In a separate Facebook post on Thursday, which was first cleared with regulators, Hastings argued that companies should be allowed to use social media to make public announcements.

"We think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers," he wrote. 

He also argued that the fact that Netflix had surpassed one billion viewing hours was not "material" to investors and the company had already blogged that it was close to passing the milestone. He said that although the stock price rose the day of his announcement, it was likely driven by a positive research report released the night before.

"We remain optimistic this can be cleared up quickly through the SEC’s review process," Hastings wrote.

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