The SEC has confirmed that public companies can use social media outlets like Facebook and Twitter to disseminate material information, provided that investors are alerted in advance that information will be disclosed in this fashion.
This guidance came in a Report of Investigation under Section 21(a) of the Securities and Exchange Act of 1934, issued on April 2, 2013. The underlying investigation concerned Netflix, Inc., and its CEO Reed Hastings. Last July, Hastings announced on his personal Facebook page that June 2012 marked the first month that Netflix had streamed more than one billion hours of content. No press release or Current Report on Form 8-K accompanied the Facebook post. Despite prior announcements that it was nearing a billion hours of monthly streamed content and the fact that its revenue model is subscription-based, the price of Netflix common stock increased 16% over the next trading day.
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