This is not the first time Hastings has appeared on the SEC's radar. Late last year, a report hit claiming that the Commission wanted to know more about how Netflix reports subscribers metrics, as I noted on Seeking Alpha at the time. Hastings, for all intents and purposes, seemed to think the SEC was out of line for asking. Netflix now reports less subscriber data, not more.

Along similar lines, Netflix has a history of ignoring the will of its shareholders. At the 2011 annual meeting, investors overwhelmingly passed a measure Hastings disagreed with; he directed the board to shoot it down. Just hideous, practically non-existent corporate governance.

And, of course, Hastings is willing to dilute the living snot out of his stock if Carl Icahn or anybody else buys too many shares. Hastings' poison pill strategy does not represent the best interest of his company, but is simply a guarantee he personally maintains control.

In his response to the SEC this time around, Hastings tells the government it's wrong and here's how it should interpret the "Fair Disclosure" regulation.

Kudos to CNBC's Herb Greenberg, who saw this coming back it when happened in July. At the time, Greenberg noted on CNBC that the SEC needed to deal with social media as it pertains to Reg FD:

My advice to the SEC: Do it and do it soon. Common sense would seem to prevail, but for some CEOs, arrogance gets in the way.

"Arrogance gets in the way."

As far as we know, that's been Netflix since Hastings took credit for its founding. Things went well. He believed his own hype. He got what he wanted -- complete control. Maybe not officially, but it might as well be, given the figurehead board and executive team Hastings has in place.

It's this arrogance, this disregard for anything but the trajectory of your personal and professional destiny that gets companies in trouble.

When you buy shares of Netflix, you're not buying a stake in a company -- in an organization with checks and balances -- you're putting your faith in one guy. Given what we know about this one guy, that's a scary proposition.

--Written by Rocco Pendola in Santa Monica, Calif.
Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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