Reg FD

It’s easy to make fun of the SEC for wanting to sue Netflix over a Facebook post. Netflix, Facebook, and the SEC are all a little funny, and bring them all together and you get a delightful orgy of hip-five-years-ago clumsiness. Also, like, olds, get over yourselves, everyone is on Facebook, why should I call Grandma on her birthday, or 8-K my operational stats? Social! 2.0!

And yet I’m a little sympathetic to the SEC here, mostly because I am old and afraid of Facebook. The agency notified Netflix yesterday that it’s planning to bring a civil action claiming that Netflix violated Reg FD by posting operational numbers – that Netflix viewing had exceeded 1 billion hours of Netflix June – on CEO Reed Hasting’s Facebook wall without press releasing or 8-King those numbers. Reg FD prohibits an issuer from “disclos[ing] any material nonpublic information regarding that issuer or its securities” to any investor or analyst without simultaneously disclosing that information through a “method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”

So if you’re Netflix you have two ways to win this: either the information was not material, or it was disclosed publicly in compliance with Reg FD. Perhaps strangely, Netflix is taking both angles. From its response yesterday: Read more »

  • 22 Mar 2012 at 7:09 PM

Congressional Insider Trading Gets Somewhat Less Legal

Today is a good day for Congress passing laws with sunny punny names, so after the JOBS Act on we go to the STOCK Act, for Stop Trading On Congressional Knowledge, which, who wouldn’t want JOBS and STOCKS and also much less Congressional insider trading. Anyway it passed, so now Congressional inside information is like corporate inside information in that if you trade on it you go to jail, maybe, sometimes. There was however some controversy as Reuters explains:

House Republican leaders argued that the political intelligence provision, which targeted former Capitol Hill insiders who use their contacts to gather information on pending legislation and sell it to Wall Street investors, could tread on First Amendment free speech rights. The final version orders a study of what to do about that increasingly widespread practice.

Coincidentally, earlier in this deadly deadly week we talked a little about the First Amendment and securities regulation, but that was in the context of people being able to say true non-confidential things about their investment prowess or prowesslessness. Even there, for non-Congress-related people, the First Amendment doesn’t seem to do much for them, though maybe the Supreme Court will change that but don’t count on it. Read more »