NEW YORK (
and its CEO Reed Hastings
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
to discuss their business.
CEO Elon Musk
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
have tight in-house regulations and offer transparency but are not monitored by the SEC as part of Reg FD.
Perhaps Hastings' post leads to enhanced oversight by the SEC when it comes to social media, given the increased role it is playing in finance. I, like many others, will certainly be watching.
Most likely tweeting it about it too.
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Written by Chris Ciaccia in New York