In August 2018, Tesla CEO Elon Musk oddly and fatefully tweeted that he had secured funding to take Tesla private. (Alexander Stein, Forbes). Shortly after, the Securities and Exchange Commission (the “SEC”) filed suit against Musk and Tesla, alleging that Musk made materially false and misleading statements in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b‑5. (SEC Complaint, Sept. 27, 2018). The SEC argued that Musk “knew or was reckless in not knowing that his statements were false and misleading” and that he omitted material facts in his statement. (Id.) According to the SEC, Musk’s statements “caused market chaos and harmed Tesla investors.” (Id.) In September 2018, the SEC and Musk reached a settlement on these charges which required Musk to step down as chairman of Tesla for three years, pay a $20 million fine, and consent to independent directors monitoring his communications to investors. (Matthew Goldstein, N.Y. Times).
Read MoreThe SEC requires public companies to disclose information and data that may be important to potential investors and shareholders of the company. On February 6, 2019, the SEC’s Division of Corporation Finance released two Compliance and Disclosure Interpretations ("CDIs")that discussed disclosure requirements for instances when board nominees or directors self-identify with specific diversity characteristics such as, race, gender, ethnicity, religion, sexual orientation, nationality, disability, and cultural background. In such instances, the SEC expects the public company to identify those characteristics and include how they were considered as long as the director or nominee consents to such disclosures.
Read MoreOn March 14, 2019, the Securities and Exchange Commission (“SEC”) charged Volkswagen AG,two of its subsidiaries, and its former CEO, Martin Winterkorn, with fraud in connection with a 2015 scandal commonly known as “dieselgate.” (SEC, Press Release). “Dieselgate” was a fraudulent scheme, masterminded by Winterkorn, under which Volkswagen marketed environmentally-friendly diesel engine vehicles that, in reality, emitted pollutants at levels 40-times greater than the legal limit in the United States. (SEC, Complaint). The parties were charged with violating the following federal securities laws: Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, SEC Rule 10b-5(b), and Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. (Id.).
Read MoreOn April 2, 2019 the founder and former Chief Executive Officer of Jumio Inc., Daniel Mattes, agreed to settle with the Securities Exchange Commission (SEC) for more than $17 million for defrauding investors. (Govind, Bloomberg). According to the SEC, Mattes “grossly overstated” Jumio’s 2013 and 2014 revenues before selling his personal shares to private investors. (Press Release, SEC). Mattes’ settlement with the SEC followed shortly after another SEC settlement with Jumio’s former Chief Financial Officer, Chad Starkey. Starkey also settled charges for failing to exercise reasonable care concerning the company’s financial statements and signing stock transfer agreements that falsely implied Jumio’s board of directors had agreed to Mattes’ sale of his private shares. Id. After Mattes’ shares were sold, Jumio restated its financial results in 2015, which showed depleted revenues and led to the company filing for bankruptcy. (Govind, Bloomberg).
Read MoreIn Freedom Watch, Inc. et al., v. Google, Inc. et al, No. 1:18-cv-02030, 2019 WL 1201549 (D.C. Cir. 2019), Freedom Watch, Inc., a non-profit public interest organization (“Freedom Watch”) and Laura Lommer, a social media user (collectively, the “Plaintiffs”) brought an action in the United States District Court for the District of Columbia against Google, Inc., Facebook, Inc., Twitter, Inc., and Apple, Inc. (collectively, the “Defendants”) alleging that Defendants worked together to intentionally and willfully suppress politically conservative content. The Defendants filed a motion to dismiss for lack of standing and for “failure to state a claim upon which relief can be granted.” The court granted the motion, stating that the Plaintiffs have failed to tie their concerns to colorable legal claims.
Read MoreAre the search results we see on the Internet the actual result of our inquiry, or is each search curated to the individual’s preferences and beliefs? Biased Google searches and social media ads, and the power of Big Tech to influence results became a concern in the wake of the 2016 presidential election after reports surfaced that Russia pushed propaganda to social media users to influence voters. (NBC News). Further, politicians from Ted Cruz to Elizabeth Warren have also voiced broader concerns about Big Tech being able to silence free speech and suppress freedom of information by selectively targeting users with ads biased toward their beliefs. (The Verge). Public officials and social media moguls recognize there is a problem, but the question is how to regulate this data that is collected from users to create biased ads. Proposals have ranged from creating consumer privacy regulations to breaking up Big Tech’s market power or regulating them like utilities. Much of the focus in recent years has been on the former.
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