SOCIAL MEDIA AND DISCLOSURES: AN EVER CHANGING REGULATION FD LANDSCAPE

There is no denying the fact that social media has permeated the fabric of world culture. The advent of social media has forever changed the way communication transpires. Today, it is possible that the average world citizen has the ability to instantly access billions of people, including global political leaders, business leaders, celebrities, artists and athletes. Additionally, consumers and investors around the globe are instantly accessible. For companies today, there is a constant struggle to balance the use of technology that allows the company to build its image and brand, remain hip, cool and forward thinking while maintaining full compliance with Regulation Fair Disclosure (Regulation FD).

In April 2013, the Securities and Exchange Commission (SEC) released its Report of Investigation Pursuant to Section 21(a) of the Securities and Exchange Act of 1934: Netflix, Inc. and Reed Hastings (‘Report of Investigation’). The report was in response to a Division of Enforcement investigation into whether Netflix, Inc., and its CEO Reed Hastings violated Regulation FD with its 3 July 2012 announcement via Mr Hastings’ personal Facebook page that Netflix streamed one billion hours of content in the month of June. At question was the use of Facebook as an acceptable channel of information dissemination considering that neither Mr Hastings nor Netflix had used Facebook previously to communicate with the public nor announce that Facebook would be used as a tool to communicate. Additionally, Netflix did not release a traditional press release, Form 8-K or a post on the company’s website.

Jul-Sep 2013 Issue

Berkeley Research Group