Hi, Paul.

The stock market can change in fractions of a second, so waiting for a Facebook post to filter its way through the rest of Facebook, then bloggers, then reporters is very much not the same thing as submitting a Form 8-K and press release to EDGAR and/or posting on your Website.  Again, no single, consistent place to look if you're just all over the Internet with this stuff.

It's one thing if a company regularly makes a habit of sharing that sort of information on their Facebook page (or if the CEO does it on his own), but there was no habit here, no indication that potentially material information would be coming from Hastings's Facebook post.  To me, the only real question is if the information is material.

And besides, it doesn't matter, because when you're talking about a major enterprise's social media efforts, you want clarity.  Compliance is not generally about taking chances and engaging in questionable behavior. 

Hi Joe,

For the few of us that don't understand in details how the stock market works, why is the SEC prefer the more usual dissemination methods – via wire services, and crucially (though not rule-mandated!) pre-open or post-close, not mid-morning on a shortened day?

Hi Joe,

"For one thing, most traders (professional or amateur) probably won't check Facebook for stock information unless the company makes it clear that that is it's habit in sharing IR news."

Here is a portion of Netflix's response to SEC:

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

So is it safe to infer from the above statement that the reporters and bloggers will soon get the news to the traders once they received the updates from Hastings's FB page. That to me is tantamount to stating that the FB posting did comply to Reg FD.

Excellent points Joe.  Failling to listen, have a policy, or strategy alone would spell trouble for a company -- failing on all three counts is a common triple-threat.

Still, I think the real problem is the fact that Netflix doesn't seem to learn from past mistakes!

CEOs are hard-pressed enough to engage on social media without being "handled."  Sure, you could go about it by having the CEO submit proposed FB status updates/Tweets/etc. to the Social Media Manager/Communications Officer/Whatever, and then having that person post for him, but I'm not convinced it needs to be that way.

It certainly doesn't need to be that way if you've trained your CEO (as funny as the idea of "training a CEO" might be) properly.

That said, Hastings is the CEO, so as far as the SEC is concerned, that's just as culpable behavior as if it was posted on the Netflix FB page.  Even someone low on the totem pole can potentially get their entire company in trouble with the SEC if they post something like that in such circumstances.

The problems with Netflix and social have been less with the company not saying enough and more with the company not actively demonstrating social listening -- and responding.

Clearly, the company has had no real direction or strategy (let alone policy) with its social media engagement, so it's little surprise that they've now attracted the attention of the SEC (7DEE attendees may recall that I included a segment on securities compliance in my Establishing Social Media Policies presentation).

At this rate of screwing up on social media, one might wonder what Netflix's 2013 major social network faux pas will be!

"Wrong" may be a bit uncharitable; while I don't personally buy Hastings's argument that the information was non-material, it is at least a plausibly believed one.

I prefer to describe the post as "unwise."

As to your point about investors on Facebook, I'd add that if there was any general, mass-market social network that one could expect investors to check regularly, it'd be Twitter, because many independent traders do use Twitter for sharing and finding stock information, and realtime stock news is easily searchable on Twitter.

Regardless, Reg FD stands -- both in letter and in spirit.  A social presence is not typically the same thing as the company website (although I'd be interested to know what the SEC thinks of companies whose ONLY web presence is a social network).

" Shouldn't even the guy with a Scott Trade account know this as soon as the guy sitting in the building next to the NYSE knows it?   "

That's a fair point jabailo. I hope this incident can spark a tremendous debate in this direction so as to cause changes in these old SEC regulations. 

I'm not convinced that Facebook -- notoriously non-private that it is -- is as public as the critics of the SEC move would suggest.

For one thing, most traders (professional or amateur) probably won't check Facebook for stock information unless the company makes it clear that that is it's habit in sharing IR news.

For another thing, you typically have to be a member to see most Facebook content -- as opposed to a press release on the company Website.

Which is really the point here.  Pretty much all Hastings had to do was file the Form 8-K, post a release on the Netflix IR website, and then post the Facebook post with a link to the release on the website. 

An even better solution: Have the CEO's social feed appear prominently on the company website.


Re: "In fact, we need to start seeing real time "health monitors" for business that are updated each and every hour."

We have that.  It's called the stock market.  Pricing IS the health monitor.  Respectfully, you can't have a "health monitor" that is ahead of the pricing.  Economics doesn't work that way.

All the more reason for a good, thorough, company-wide social media policy, Alison.  No one, apparently, is immune.