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Netflix got a Wells notice from the SEC for a Facebook posting CEO Reed Hastings made.This is ridiculous.
A Wells notice is a warning that the SEC is likely to bring charges against an individual or company. Typically, it’s done for a viable reason. In this case, the SEC is totally over-reaching, acting like a idiotic overly bureaucratic organisation.
It’s moves like this that make it seem like government bureaucracy really does smother businesses.
Here’s what happened.
In July, Hastings posted to his Facebook page that Netflix had had 1 billion hours of streaming in June. The stock jumped that day.
If Hastings had just shared this information with a small circle of friends, you could make an argument that the information wasn’t publicly disseminated. But Hastings has 200,000 subscribers on Facebook, including journalists and analysts.
If the SEC wants to use this case to make a new rule about social media and what’s acceptable disclosure and what’s not, that’s fine. It should do that.
But to punish a company and executive for taking advantage of a new service to publicly disseminating information in a way that is vastly more public than SEC filings or press releases is unfair. Not to mention a waste of resources.