Northern, WI 12/7/2012 (BasicsMedia) — Social Media has taken down more celebrities, sports figures and now executives than any other technology tool in history. I grant you that recorded phone conversations (planted bugs) , stupid emails depicting fraud and all together loose lips have been damaging, but the sheer volume of stupidity using FaceBook and Twitter is staggering. It really makes me wonder what someone is thinking (or not thinking) when they Tweet or post on their FaceBook wall with limitless hubris. The newest flub comes from a Reed Hastings CEO at Netflix (NASDAQ:NFLX) who just did a mega-deal with Disney (NYSE:DIS) to resell content.
Netflix (NFLX) has received a “Wells notice” from the SEC indicating the agency will probably take action against the company and CEO Reed Hastings over a Reg-FD violation. The notice is related to a July Facebook post in which Hastings bragged that Netflix had streamed over 1B hours of video in June.
The SEC is trying to make an example of Netflix and this toothless agency who continues to make mistakes at every turn – no doubt – had some pencil neck staffer stumble upon the Hasting post. I can picture the staffer adding as many CEO’s or potential FaceBook friends to his/her page, and probably spent time looking for Steve Cohens info from SAC Capital. I can tell that person to stop looking..he doesn’t have one.
This is a cooo for the SEC but overall it’s bad for business as Sarbanes Oxley drives more US companies over seas or to Private Equity. The days of the good deed by a Kevin Costner character in the Untouchables are long gone. The SEC is a worthless watchdog who has done little, and the conclusion remains that Capitalism and Free Markets in general are un-regulatable.
As the famous Economist Milton Friedman said ” insider trading should be legal…”, the market would be priced efficiently if the secretary over heard a boardroom conversation and went out and bought the stock – shares would be fairly priced before those executives broke for lunch.
In a post to his Facebook page, Netflix (NFLX) CEO Reed Hastings disclosed that SEC staff informed the company that they are recommending that the SEC bring a civil action against Neftlix for a public Facebook post Hastings made in July regarding members having viewed over 1B hours of content. SEC staff are asserting that the post violated “Reg FD,” a rule designed to ensure that individual investors have equal access to information as large institutional investors, according to Hastings.
Hastings defended his July post by contending that his Facebook post was “very public” due to his having 200,000 subscribers on the site and the fact that the company has already said previously that it was serving nearly 1 billion hours per month. Hastings also pointed out that a move up in Netflix’ stock the day of the post may have been prompted by a positive Citigroup research report the night before. Hastings closed by saying, “We remain optimistic this can be cleared up quickly through the SEC’s review process.”
Disclaimer: We have no position in any stock mentioned here.