This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Netflix SEC Probe Raises Bigger Issues

NEW YORK ( TheStreet) -- Netflix (NFLX - Get Report) and its CEO Reed Hastings received a Wells notice for a Facebook (FB - Get Report) post. But the implications will go much further than Hastings and Netflix. This may well be the defining moment of social media when it comes to finance.

Public companies often have social media policies that preclude some employees from posting facts about the company itself for this very reason. They are scared of receiving these types of letters from the Securities and Exchange Commission, for fear of repercussions, fines, and perhaps even worse.

The issue brings to mind just how public is a social media account from a CEO, like Hastings or any of the other CEOs who use Facebook or Twitter to discuss their business.

Just recently, Tesla Motors (TSLA - Get Report) CEO Elon Musk tweeted that the company became cash flow positive. "Am happy to report that Tesla was narrowly cash flow positive last week. Continued improvement expected through year end," the South African born Musk wrote in a tweet.

Knowing that a company is cash flow positive is material information, but Musk, instead of putting it in an 8-K, chose to do so in a tweet. Musk has over 114,000 followers, a fairly significant amount, but I would bet that not all of his shareholders use Twitter. Sure, the information became widely reported once Musk tweeted it, but the disclosure of the information is what is at stake here, not the inevitable follow up and analysis of the information.

Many investment banks are fearful of letting employees use social media, and it looks like those fears may ultimately be proven correct, depending upon the outcome of this case.

Hastings, with his usual bravado, thinks the company will be vindicated. "We remain optimistic this can be cleared up quickly through the SEC's review process," Hastings wrote as part of his Facebook post about the SEC Wells notice.

There are plenty of places where social media and finance come head-to-head every day, and the regulation is murky at best. Places like StockTwits have tight in-house regulations and offer transparency but are not monitored by the SEC as part of Reg FD.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FB $118.57 0.84%
NFLX $93.11 3.42%
TSLA $241.80 0.43%
AAPL $93.64 -0.11%
GOOG $698.21 0.75%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs