Corporate Law

SEC greenlights social media sites for company news, won't pursue Netflix chief over Facebook post

Because the rules for corporate use of social media websites weren’t clear, the U.S. Securities and Exchange Commission won’t seek to impose regulatory sanctions on the CEO of Netflix Inc. over a Facebook post last July about the company’s booming business.

But the SEC released a copy of its investigation of CEO Reed Hastings over the post in an effort to clarify what the standards are for making announcements about company results, Bloomberg reports in an article reprinted in the Star-Ledger.

While the SEC approved the use of sites such as Facebook or Twitter to disclose corporate results, it also said that investors need to be told in advance where to look for information.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, acting director of the SEC’s enforcement division, in a written statement. “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.”

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