Last summer, with
relatively little fanfare, Twitter added clickable stock symbols to its tweets.
This is how it works: Add a "$" in front of a ticker symbol in Twitter's search
box and you'll be able to engage in conversations about a particular company, similar to what would happen with
a hashtag "#" followed by the name of your favorite pop star.In social media circles,
introducing the "cashtag" is yet another way to stimulate chatter among people
who are interested in a particular topic, such as public companies. But like
all seemingly helpful social media tools, the cashtag may, in fact, send your
stock tumbling down in 140 characters or less. We recently observed
such a scenario.
Shortly after market open on an otherwise average trading day,
an anonymous tweet began surfacing about an FBI raid on a certain public
company. Soon the company's trading volume began rising and its shares began
dropping, so much so that, as IR representatives for the company, Bloomberg
called us to find out if the rumors on Twitter were true. We confirmed that the rumors
were false, and soon the stock corrected itself.
We later learned that
the SEC opened an investigation on the tweeter for a possible "10b-5" infraction, which is
when someone makes fraudulent claims in connection with the purchase or the
sale of a security.
Rumors surrounding
public companies have been swirling about the Internet long before the cashtag,
but this example serves as an important reminder that new information channels, carrying potentially market moving information, are reaching influential audiences at light speed. And that means the onus will
increasingly fall on investor relations professionals to ensure chirping birds
are not making fraudulent claims.
-- Evan Pondel, epondel@pondel.com
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