These days, you don’t have to look beyond the daily headlines to find ethical and fiduciary issues involving social media. Nowhere is this more evident than on Twitter, where a wide variety of users post and share hundreds of millions of messages a day. Today’s scandals on social media are not limited to social gaffes but may include ethical breaches and even cross into the realm of civil or criminal liability.
For example, in August, a tweet by Tesla CEO Elon Musk that he had secured funding to potentially take Tesla private at $420 per share led to lawsuits against Musk claiming that he drove up the value of Tesla shares and materially misled investors. These lawsuits were followed in September by the Securities and Exchange Commission charging Musk with securities fraud and seeking to prohibit him from serving as an officer or director of a public company, and also charging Tesla with failure to have appropriate controls and procedures in place relating to Musk’s tweets. Two days later, Musk and Tesla settled with the SEC; in addition to $40 million in penalties, Musk agreed to step down as Chairman of the board for three years, and Tesla agreed to appoint independent directors to its board and implement additional controls and procedures to oversee Musk’s communications.
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