Social media has become an integral part of business marketing and brand awareness. It has become a great tool to reach countless more potential customers and clients than traditional marketing avenues, but it does come with a risk.
The risk of businesses and entrepreneurs using social media was highlighted recently by Elon Musk, President and CEO of Tesla, who recently tweeted he was considering taking Tesla private at $420 per share and funding was secured. Musk is being investigated by the SEC and subject to numerous shareholder lawsuits for his statements on Twitter and is accused of fraud and market manipulation because he has later abandoned the idea of going private costing investors a lot of money.
The SEC is also investigating Musk because he is blocking people on Twitter, including investors and journalists who criticize Tesla. The SEC is trying to determine if this is illegal for a CEO of a public company because their communication methods must be “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” By blocking people, Musk is allowing one set of investors access to information that others will not have. A federal judge has ruled that President Trump cannot block people on Twitter because this violates people’s First Amendment rights. Musk could be next.
Every business should have a social media policy which sets forth who has the right to post for the company and what type of disclaimers other employees must utilize. If you have questions on how to formulate such a policy, your friends at Rosenblatt Law Firm are always here to help.