Netflix CEO Reed Hastings came under fire last 2012 after he posted user numbers for his company on his personal Facebook page. The Securities and Exchange Commission at the time said posting such information might be in violation of insider trading practices. That same agencies has now found no wrongdoing on the CEO’s part.
On Tuesday the SEC ruled that a personal Facebook disclosure is public enough for shareholders to learn about a company’s position.
In a public statement George Canellos, Acting Director of the SEC’s Division of Enforcement proclaimed:
“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.”
Basically a CEO can share company info to a social network, but only if they disclose which network they are sharing with to their shareholders.
“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information.”
With social networks like Facebook surpassing 1.2 billion users it appears that using those networks in place of a PR release that might reach a few thousand people is A-OK by SEC standards.
The SEC has dropped all charged against Reed Hastings and Netflix, noting that the newness of social media meant no restrictions were in place.