Netflix SEC Investigation Report Clarifies the Use of Social Media and Regulation FD

Regulation FD -

Regulation FD prohibits US public companies or persons acting on their behalf from selectively disclosing material, nonpublic information to securities professionals or investors when it is reasonably foreseeable that such investors will trade on the basis of the information. Regulation FD requires that when such information is disclosed, it must be filed with the SEC on a Form 8-K or disclosed through a channel that provides for broad and non-exclusionary public dissemination, such as a widely distributed press release.

Recognizing the increased use of corporate websites to disseminate investor information, in 2008 the SEC released guidance (the “2008 Guidance”) on the use of company websites as a means of complying with Regulation FD. This guidance, which applied to websites, blogs and RSS feeds, listed several factors for public companies to consider in determining whether their websites and blogs could be considered recognized channels of distribution. Such factors include whether the company regularly posts material information on its website, the extent to which investors rely on the company’s website for such information, and the steps that the company has taken to make its website accessible, including whether it uses “push” technology, such as RSS feeds.

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