NewYork(Thomson Reuters Regulatory Intelligence) – Corporate executives who feel left behind or simply lack time to build a Twitter following must have experienced a bit of schadenfreude when Tesla Chief Executive Elan Musk fell victim to his own tweets, which landed him a $20 million fine and a job demotion at the insistence of the U.S. Securities and Exchange Commission. But lessons about the role of compliance in managing the controls over executive-suite social media can be drawn from the curious case of Musk and his Twitter account.
Few chief executives are as prolific and outspoken in social media as Musk, and less than one third are active on Twitter, recent studies have shown. Technology firms are a large part of the active total. The Musk SEC case, however, shows that companies should start looking at how to implement controls as social media use grows. The case shows specific areas of concern for compliance, what is allowable and now the agency is linking social media to broader governance concerns.
For starters, it is worth noting that Musk’s settlement on Saturday allowed him to keep both the role of Tesla chief executive officer role and his Twitter account, even if he had to step down as chairman. The SEC backed away from a stiffer charge of securities fraud that would barred him from holding office at a public company. SEC Chairman Jay Clayton, who has frequently argued against punishing shareholders for managers’ misdeeds, explained that “the skills and support of certain individuals may be important to the future success of a company.”