As we highlighted at the end of last year, the SEC issued a Wells notice to Netflix Inc. regarding a post by Netflix CEO Reed Hasting on his personal Facebook page.
On July 3, 2012, the CEO of Netflix Inc. did what many of us frequently do: updated his Facebook account. However, he updated his account with a post stating that Netflix viewing “exceeded 1 billion hours” in the month of June.
I spent hours this weekend glued to my computer screen. Curious to know if “House of Cards” would entertain as promised, I watched the first few episodes as a skeptic, only to be rewarded with solid acting, clever writing and a story line that kept on giving.
In the wake of the SEC recommending an enforcement action against Netflix, Inc. and its CEO for social media postings that potentially violate Regulation FD, public companies must increasingly ensure that they understand, and comply with, their obligations under Regulation FD.
The National Association of the Deaf had sued Netflix under the Americans with Disabilities Act because it claimed that the Internet was a place of public accommodation and close captioning was necessary to insure that deaf individuals had equal access to the services.
LXBN TV: SEC Upset with Netflix CEO Over Facebook Post, Needs to Get with the Times—Robert White, Jr.
Make no mistake, the Securities & Exchange Commission has a lot on its plate right now—from the JOBS Act, to combatting insider trading to a number of other things. With that in mind, getting their rules and regulations up-to-date during a time in which the technological landscape is changing drastically probably isn’t their highest priority. As a result, incidents like the one between the SEC and Netflix and its CEO tend to happen. See, Netflix CEO Reed Hastings shared a bit of news via a Facebook post; the SEC labeled it as “selective disclosure” and is now going after both Netflix and Hastings.
Recently, Netflix settled a lawsuit brought by the National Association for the Deaf (NAD) that alleged that its online closed captioning practices violated the American with Disabilities Act (ADA). As a part of the settlement, Netflix agreed to caption all of its “Watch Instantly” programming by September 30, 2014.
Courts Preliminarily Approve Settlements in Netflix and Blockbuster Video Privacy and Protection Act Class Actions
Two Federal District Courts recently approved settlements in two significant class actions brought under the Video Privacy and Protection Act, 18 U.S.C. § 2710, et seq. (“VPPA”), which limits the disclosure of personally identifiable information about subscribers as well as the amount of time that video rental service providers can retain subscriber information.
In a July 27, 2012 article entitled “In Sliding Internet Stocks, Some Hear Echo of 2000” (here), the New York Times detailed how the shares of some of the hottest publicly traded social networking and Internet companies have been hammered recently. The Times suggested that as the companies’ shares dropped “there were instant echoes of the crash of 2000, when the money stopped flowing, the dot-coms crumbled and Silicon Valley devolved into recriminations and lawsuits.”
According to court documents filed last week, Netflix has agreed to change its data storage practices and pay about $9 million to settle allegations that it unlawfully retained and disclosed customers’ video-viewing histories. Specifically, Netflix agreed to decouple viewing history from identification information once users have been inactive for a year; to pay $30,000 to the class representatives; to pay up to $2.25 million to class counsel; and to give the remaining funds to nonprofit organizations that provide privacy-related education.