According to a report from Fortune, Elon Musk may face SEC trouble for blocking naysayers, critics, and journalists on Twitter.
Twitter has been a legitimate channel for investor communication since 2013 when the Securities and Exchange Commission (SEC) stated that the social media platform as a valid disclosure method as long as companies warned investors prior to posting on the platform.
According to the rule, company communication methods must be “reasonably designed to provide broad, non-exclusionary distribution of the information to the public.” Blocking users on Twitter means that they are being excluded from the information distribution.
Michael Liftik, a former deputy chief of staff of the SEC, who helped conduct the 2013 social media inquiry, discussed the current situation with Musk stating: “The point is to just make sure everyone knows.
George Canellos, then acting director of the SEC’s division of enforcement, said in a 2013 statement relating to social media: “One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information… Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”