Reed Hastings, Chief Executive of Netflix, has confirmed that the company has received a “Wells Notice” from the Securities and Exchange Commission.
The action is being taken as a result of comments which Mr Hastings made on Facebook in July when he announced that Netflix members were now viewing over one billion hours of video per month.
The Wells Notice means that SEC staff will recommend the full commission pursue either a cease-and-desist action and/or a civil injunction against Netflix and Mr Hastings over the alleged violation.
The SEC believes that the information revealed by Mr Hastings is material information, which should have been disclosed either in a press release or regulatory filing.
Mr Hastings has responded to the charge by stating: “First, we think posting to over 200,000 people is very public, especially because many of my subscribers are reporters and bloggers.”