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The SEC Ought To Take On Twitter Not Musk

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The Securities Exchange Commission (SEC) announced yesterday that a lawsuit had been filed accusing Tesla co-founder and CEO, Elon Musk of securities fraud.

He had announced on Twitter last month that he was considering a plan to take Tesla private, valuing it at $420 per share. The result was chaos, with Tesla’s stock rising before doubts called about the sincerity of the plan caused the rally to recede.

Most analysts have argued that Musk was wrong to tweet this, and some have accused him of deliberately instigating a rally in the share price in order to incur losses to traders who were betting against Tesla. Musk has been critical of so-called ‘short sellers’ in the past, and some believe this whole saga was him exacting revenge on those who have not supported him.

I’m not so sure that we can so easily pin the blame on Musk in this way. There have been calls for him to limit his Twitter usage, or as former SEC commissioner Professor Joseph Grundfest from Stanford Law School has argued for him to “get what I call a ‘Twitter nanny’, where he can’t communicate without first clearing it with a responsible adult”.

I’m not so sure that a ‘digital Mary Poppins’ is the answer.

The problem with Professor Grundfest’s idea is that he doesn’t recognise the category difference between the social media platforms such as Twitter, Facebook, Instagram and ‘traditional’ forms of communication such as television, radio, or the printed press.

Not recognising this category difference means that announcements on Twitter are treated in the same way as those made in the Financial Times. Yet the process by which one tweets couldn’t be more different to the culture of Press Releases and news cycles of old.

I’m not suggesting we should write off whatever a public figure says on Twitter, but what I am saying is that Twitter themselves ought to recognise that their platform is used by many high profile people, and their public comments on their platform can instantly reverberate around the world in a way that was never possible when securities rules were devised.

Twitter, therefore, ought to consider features such as a VIP mode; where tweets made by people in high profile roles, such as the Directors of public companies are vetted in real-time by an AI that might suggest ‘are you sure?’ prompts before posting or ‘auto embargo’ waiting times before tweets can be published if they score high against a set of rules.

Such a set of rules might be devised by organisations such as the SEC, who ought to regulate what can and cannot be said publically on Twitter by those whose words are likely to move markets.

Company boards might also agree on parameters of what their officers can and cannot tweet about. Such parameters might be automatically applied to so-called ‘VIP’ accounts, and they can only be personally accountable if they override them.

If successful for business world leaders, we might even consider such features for our elected representatives also?

To expect self-restraint on social media is to hold public figures to a higher standard than we can reasonably expect of them. To recognise that the tools enable the harm to be caused at least as much as their users, would be the first step to ensuring that technology firms are held to account for the consequences of their success and ubiquity.

 

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