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SEC Investigates Netflix CEO Reed Hastings Over Facebook Posting
alexander_686 writes "The SEC is investigating Netflix CEO Reed Hastings over one of his Facebook postings. The agency is questioning his July 1 Facebook posting, seen by 200,000 followers, in which he said customers watched 'over 1 billion hours' of videos on Netflix in June. He had previously posted on his company blog that members were viewing 'nearly a billion hours per month.' From the article: '“We think the fact of 1 billion hours of viewing in June was not ‘material’ to investors, and we had blogged a few weeks before that we were serving nearly 1 billion hours per month,” Hastings said in the filing today. “We remain optimistic this can be cleared up quickly through the SEC’s review process.”'"
I'm surprised something this innocuous can anger the SEC. Wow, they're a lot stricter than I thought!
Does everything a company or company offer say have to be heavily vetted by a legal team before it can go out?
A little lie.
No big deal.
is everything someone says scrutinized these days with potential repercussions
I ate 4 pizzas at lunch today.
posting as anonymous coward to avoid the potential law suits and investigations
Can someone explain why saying something like this can get you in trouble with the SEC?
I'm still baffled why anyone would post anything meaningful about themselves on Facebook. How many kids have gotten themselves busted for posting pictures of stuff they shouldn't be doing. Or adults for that matter. Just how attention starved are people these days? I would have thought the CEO of a fairly large company would be smarter than this. Hell, I would have guessed that someone in that position would have a staff of marketers specifically to do this for them.
Sure sounds public to me.
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Netflix had 29.4 million online streaming accounts as of September 2012, and with 720 hours in a month, 1E9 hours works out to each subscriber viewing an average 34 hours of online streaming per month. While possible, I think this statement should have led to some raised eyebrows.
...and the banks are walking? Seriously. Priorities people!
For those who seek perfection there can be no rest on this side of the grave.
I wonder if the CEO donated to the 'wrong' party this past election. This sounds an awful lot like revenge.
Good security is based upon reality and common sense. Common sense is a function of having common knowledge.
I could easily see a billion hours. Given that I, and most of those I know, will turn on Netflix just to keep them company when working late.
In the last month I've streamed 7.5 seasons of monk, 2 of x-files, and 3 of psych and 30 Rock and the office, various documentaries, and Indy films and old films.
-Dilmah
They haven't done anything about a few financial institutions purposefully destroying the world's economy, but a CEO saying his company is doing really well on facebook is a problem.
This isn't the nineteenth century, when it took a month to get the information out. Just because the stock holders are too stupid to follow him a facebook.
Also, we need to make a distinction between investment and simple stock ownership. The only time it's investment is during an IPO. After that, it's pretty much commodity trading hoping to make money off of market instability.
They are acting in precise accordance with their priorities.
Not yours.
And what you think their priorities should be is completely immaterial; they only represent people who matter (i.e. not poor nobodies like you).
I wonder if your tin foil hat is a little too tight. This sounds an awful lot like the SEC operating under a law written before the ascendance of Social Media, rendering said law to be rather archaic.
But jumping to conclude malfeasance is a lot less taxing on the brain cells, so Bravo. *golf clap*
The CEO of Netflix donates hundreds of thousands of dollars to Democrats in California. I doubt if that's the reason for the Obama administration's SEC investigation.
Nobody cares and this is not relevant to the article.
and they told me to watch videos on Internet Explorer instead. Well the TV for my parents was not hooked up to the PC.
You could always buy a PC and plug it in. It'd be cheaper than starting your cable sub again, unless of course your cable company offers free TV with Internet purchase.
If Reed Hastings knows these stats why don't we? Let's petition Netflix for an hour/month (or something) stat on your account. Expose it as an API call. Interesting value proposition to people, "look how many more hours you watch Netflix than Cable!". Also easy to automate finding those needing to be surgically removed from couches. (Ok, kidding about the last bit, but not anything else)
Most prosecutions are nothing more than revenge by the majority and/or the elite. Prosecutors are in it for the money and politics. The more successful the (meaning the more convictions) the prosecutor the better there future holds. Guilt of the targeted and morals have nothing to do with it. Anybody who actually has morals would not be aiming to punish. The security of the people is what matters and we don't need to be 100% safe. Being less than 100% is more beneficial as no person within society is perfect. We don't want to lock everybody up who errors from time to time because there would be a net loss even if we were 100% safe. The people who are at risk are the ones for which the majority don't like. Be it the CEOs who steal and commit environmental crimes or the outride child murders.
If there is a group in society whom need protection it is those we have sent to prison or otherwise treat like dogs and force to live under bridges.
You don't have to speculate. Political contributions -- at least to groups affiliated with candidates and parties -- are a matter of public record.
As it happens, Reed Hastings donated a lot of money, all of it to Democrats. So, either the Republicans are behind this despite not having control of the White House, or your theory should have been researched a little more carefully.
What is this, Belize?
are a little too serious.
Never say never. Ah!! I did it again!
This relates to Regulation FD (for "Full Disclosure"). Basically, you can't release information that could be material to investors (i.e. potentially affect their decision to buy/hold/sell your stock) without making it available to all investors. This rule was written because, in the past, companies would have informal conversations with institutional investors and analysts and give them information that would better inform their investing decisions before that information was "publically" released. Any corporate attorney worth their salt would advise the CEO to release this type of information in a Form 8K (an "informational" filing with the SEC) at the same time a statement like this was made. It clearly speaks to demand and, indirectly, sales revenues for the current and future quarters. Most analysis and investors are interested in that type of metric. If the CEO intended this to be a public release, it was pretty bad judgement to do it via Facebook or a blog. Just another WTF? decision from the Netflix management team...
I work for [redacted] which is why I won't say anything about [redacted] or especially anything about the [redacted] incident that [redacted] 17,000 people and caused the entire town of [redacted] to go bald and [redacted] at 3 in the morning.
Which is why anyone with an ounce of sense doesn't talk about their company (especially the higher up you go in the management chain). And especially never put it in writing. Duh.
what a crock
i was thinking the same thing, not necessarily for the election, but revenge for something. it's so petty and spiteful, like revenge.
People underestimate how much the SEC monitors things you say. I work for a Big 4 in the consulting arm, and you'd be surprised how many regulations there are about what we can say, even on Facebook. In fact, we have to take explicit training on a very regular basis on what we disclose and what we do not.
And it's not even just me who's bound by these regulations: my wife and other people I "closely" interact with (e.g. my parents) are also bound them.
For instance, we have a multi-family home and my parents moved in with us last year as they were getting old. Ever since that happened, I have had to disclose their holdings as well to make sure there isn't any insider trading. The more senior you are, the more restricted your holdings are (managers, directors, and partners/principals are under more scrutiny and tighter regulation than, say, analysts and associates/senior associates).
I am strongly bound by what shares I can buy, sell, etc. My financial advisor has to pre-check every equity or bond that he purchases before he can invest in them. I can't even choose my own insurance provider or mortgage provider. All this, even though I am not even in the audit/accounting/tax line of service. I'm in advisory, but most of what I do is helping customers in my vertical explore new markets, new customer segments, build new products etc. So, that gives me access to not only what *a* client can do but also what the general industry patterns are and what we've done at other similar clients (without a conflict of interest, of course -- no one is willing to share particulars as that would violate our agreement, but we do share the frameworks used, approach, any financial models, industrial research etc).
I mean, do you know that I am not supposed to "check in" to a restaurant near a client site using Facebook? Why? Because someone may then realize that the restaurant is near a client site and associate that with the work we do. You're not even allowed to say, "Big day today!" even if the client is launching something that's pretty awesome, and you've been busting your ass for past 3 months, working 80 hour weeks. Your boss *will* add you on Facebook and follow you on Twitter, because that way they can generally make sure to keep tabs on you. Will they tell you this explicitly? Of course not. They cannot. But it's generally "understood". A colleague of mine said something about how her client is launching something big. HR got wind of it, they said that someone could look up her colleagues on LinkedIn and extrapolate who one of the clients was (based on her LinkedIn connections and where she travels to), and fired her. It took all of 2 days, and she barely left it up for a couple of hours.
Even on Facebook, I have some pretty senior clients as friends. While they can't see all my posts, this strongly limits what I can say about my work, which is great. In the rare occasion that ration is trumped by emotion and I want to say something potentially crazy.
So, where am I going with all this? Well, my point is that no, what the Netflix CEO did was wrong. It doesn't matter who did it, you must understand that if there's one thing people care more about, it's money. And when it comes to money, you can bet your bottom dollar that someone's watching what you say.
Posting anonymously for obvious reasons...
I don't see what everyone's hang-up is with this. It's an easy mistake of semantics, subtle nonetheless.
What needs to first be determined is whether stating publicly they were "serving nearly 1 billion hours per month" a *few weeks* before makes their *privately* announced statement "customers watched 'over 1 billion hours' of videos on Netflix in June" immaterially.
Of course, I think the SEC has better things to do but the investigation is legit.
Well, my point is that no, what the Netflix CEO did was wrong.
Well, if it was wrong, and unlike you, I'm not saying it is (mostly because this sounds like a valid job activity for the CEO), then Netflix can discipline this guy for that. Not the SEC. Instead, this seems a good argument to limit more of what the SEC does.
Personally, I think making most of these regulations voluntary is a good idea. It separates the men from the boys. If your company can't be bothered to do simple or equitable information control just because it's no longer illegal, that's great for investors to know. Frankly, I think we could get away with just good accounting regulations and immediate notification of all insider trades (with no restriction on timing of insider trading).
That's a philosophical argument. Your opinions notwithstanding, the CEO made some confidential information available, the equivalent of a public announcement, to a selective audience. Now whether or not he was right in doing so, he broke the law (or at least some regulations).
Makes me wonder who was actually behind that "civil claim". I can't help but think that someone may have gotten a little jealous after Netflix won the rights to Disney movies.
That's a philosophical argument.
Given that law is applied philosophy, this sort of thing is to be expected.
Your opinions notwithstanding, the CEO made some confidential information available, the equivalent of a public announcement, to a selective audience. Now whether or not he was right in doing so, he broke the law (or at least some regulations).
But that's not the end of it. Now that we see that this particular law/regulation leads to results that don't always make sense (assuming your interpretation is correct), we can choose to keep it despite those results or change the law appropriately.
There's also the possibility that he hasn't actually broken the law and the SEC has overreached itself. I think that the likely outcome in this case since the confidential information was just an arbitrary sales threshold that the business had been close to breaking for a couple of months (something which I gather was common knowledge at the time). In other words, that his defense for his actions is correct.
Can you please go after some REAL criminals for a change?
Thank you.
Another point to consider is that a lot of business data is "Encoded". You hear a lot of stuff like "X company is 'concerned' about some such development". They can't outright say "Jim over at Seagate told me that his last batch of inventory was defective and so he won't meet his numbers this quarter" because that is too obvious. So they say things like "concerned" about "the current trends in the hard drive business being sustainable".
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
I don't know if they still do it. But McDonalds used to use Over X Served on their signs. How is this any different at all?
How much did Hastings have to pay for all 200,000 followers to see the post? Don't only like 10% of your followers see the post unless you pay?
Competition Good, Monopoly Bad.
I wonder if the CEO donated to the 'wrong' party this past election. This sounds an awful lot like revenge.
Everything I google says he donated to the party that won.
Everything including the parts where he spends most of his campaign contribution money on education races. That may upset the government, though. People being educated enough to see how badly they're being fucked is not good for Uncle Sam.
The SEC isn't politically biased.
It's just another incompetent government bureau.
Big Brother is watching...