Business LawData Security & Privacy

Does Twitter Monitoring Technology Give Some Investors Unfair Advantage?

 
When executives of publicly traded companies sign their annual and periodic statements, such as Form-10K or Form-10Q, with the various regulatory agencies, it is a comprehensive summary of the corporation’s performance.  In signing these forms, the executive is attesting that all data pertaining to the health and viability of the organization has been fully disclosed to all investors.  Gaining access and insight to information about the corporation that has not been fully disclosed to all investors may lead to serious insider-trading issues.  With the advent of new monitoring technology, some investors are able to harness information that may not be fully available to all investors.  How does this change the efficacy of full disclosure laws in the investment community?
 
In days leading up to Apple, Inc.’s, anticipated launch of its latest product, the iPad, The New York Times research lab created a real-time look at Twitter mentions related to the announcement.  The lab monitored "iPad-related messages [that] were coming through Twitter at an average of 2,200 a minute, and maintained steadily at around 1,500 a minute hours after the briefing ended."  The report went on to state that "[t]he Lab started collecting data at 1 p.m. with select Apple-related keywords, including Apple, Mac, tablet and Steve Jobs — and the team then added new words as they appeared during the briefing. Specifically adding the word iPad when Steven P. Jobs, Apple’s chief executive, disclosed the name of the new device." 
 
Obviously, the purpose of constructing such a monitoring system was for research purposes which lead up to the announcment – which most people knew were coming anyway.  However, a serious issue emerges here, namely, what if individuals were able to take technology like Twitter, and monitor traffic over an extended period of time?  What if the information derived from those reports is used to give some investors a competitive advantage over others?  These real concerns should give any business a moment of pause, and at the very least, reconsider how its employees employ social networking devices in the workplace.  A tried and true solution is through constant reinforcement training workshops centered around proper protocol in the use of technology in the workplace.
 

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