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Is it HIGH TIME we allow Cannabis Content on Social Media?

 

Is it HIGHT TIME we allow Cannabis Content on Social Media?

The Cannabis Industry is Growing like a Weed

Social media provides a relationship between consumers and their favorite brands. Just about every company has a social media presence to advertise its products and grow its brand. Large companies command the advertising market, but smaller companies and one-person startups have their place too. The opportunity to expand your brand using social media is limitless to just about everyone. Except for the cannabis industry. With the developing struggle between social media companies and the politics of cannabis, comes an onslaught of problems facing the modern cannabis market. With recreational marijuana use legal in 21 states and Washington, D.C., and medical marijuana legal in 38 states, it may be time for this community to join the social media metaverse.

We know now that algorithms determine how many followers on a platform see a business’ content, whether or not the content is permitted, and whether the post or the user should be deleted. The legal cannabis industry has found itself in a similar struggle to legislators with social media giants ( like Facebook, Twitter, and Instagram) for increased transparency about their internal processes for filtering information, banning users, and moderating its platform. Mainstream cannabis businesses have been prevented from making their presence known on social media in the past, but legitimate businesses are being placed in a box with illicit drug users and prevented from advertising on public social media sites. The Legal cannabis industry is expected to be worth over $60 billion by 2024, and support for federal legalization is at an all-time high (68%). Now more than ever, brands are fighting for higher visibility amongst cannabis consumers.

Recent Legislation Could Open the Door for Cannabis

The question remains, whether the legal cannabis businesses have a place in the ever-changing landscape of the social media metaverse. Marijuana is currently a Schedule 1 narcotic on the Controlled Substances Act (1970). This categorization of Marijuana as Schedule 1 means that it has no currently accepted medical use and has a high potential for abuse. While that definition was acceptable when cannabis was placed on the DEAs list back in 1971, there has been evidence presented in opposition to that decision. Historians note, overt racism, combined with New Deal reforms and bureaucratic self-interest is often blamed for the first round of federal cannabis prohibition under the Marihuana Tax Act of 1937, which restricted possession to those who paid a steep tax for a limited set of medical and industrial applications.    The legitimacy of cannabis businesses within the past few decades based on individual state legalization (both medical and recreational) is at the center of debate for the opportunity to market as any other business has. Legislation like the MORE act (Marijuana Opportunity Reinvestment and Expungement) which was passed by The House of Representatives gives companies some hope that they can one day be seen as legitimate businesses. If passed into law, Marijuana will be lowered or removed from the schedule list which would blow the hinges off the cannabis industry, legitimate businesses in states that have legalized its use are patiently waiting in the wings for this moment.

States like New York have made great strides in passing legislation to legalize marijuana the “right” way and legitimize business, while simultaneously separating themselves from the illegal and dangerous drug trade that has parasitically attached itself to this movement. The  Marijuana Regulation and Tax Act (MRTA)  establishes a new framework for the production and sale of cannabis, creates a new adult-use cannabis program, and expands the existing medical cannabis and cannabinoid (CBD) hemp programs. MRTA also established the Office of Cannabis Management (OCM), which is the governing body for cannabis reform and regulation, particularly for emerging businesses that wish to establish a presence in New York. The OCM also oversees the licensure, cultivation, production, distribution, sal,e and taxation of medical, adult-use, and cannabinoid hemp within New York State. This sort of regulatory body and structure are becoming commonplace in a world that was deemed to be like the “wild-west” with regulatory abandonment, and lawlessness.

 

But, What of the Children?

In light of all the regulation that is slowly surrounding the Cannabis businesses, will the rapidly growing social media landscape have to concede to the demands of the industry and recognize their presence? Even with regulations cannabis exposure is still an issue to many about the more impressionable members of the user pool. Children and young adults are spending more time than ever online and on social media.  On average, daily screen use went up among tweens (ages 8 to 12) to five hours and 33 minutes from four hours and 44 minutes, and to eight hours and 39 minutes from seven hours and 22 minutes for teens (ages 13 to 18). This group of social media consumers is of particular concern to both the legislators and the social media companies themselves. MRTA offers protection from companies advertising with the intent of looking like common brands marketed to children. Companies are restricted to using their name and their logo, with explicit language that the item inside of the wrapper has cannabis or Tetrahydrocannabinol (THC) in it. MRTA restrictions along with strict community guidelines from several social media platforms and government regulations around the promotion of marijuana products, many brands are having a hard time building their communities’ presence on social media. The cannabis companies have resorted to creating their own that promote the content they are being prevented from blasting on other sites. Big-name rapper and cannabis enthusiast, Berner who created the popular edible brand “Cookies”, has been approached to partner with the creators to bolster their brand and raise awareness.  Unfortunately, the sites became what mainstream social media sites feared in creating their guideline, an unsavory haven for illicit drug use and other illegal behavior. One of the pioneer apps in this field Social Club was removed from the app store after multiple reports of illegal behavior. The apps have since been more internally regulated but have not taken off like the creators intended. Legitimate cannabis businesses are still being blocked from advertising on mainstream apps.

These Companies Won’t go Down Without a Fight

While cannabis companies aren’t supposed to be allowed on social media sites, there are special rules in place if a legal cannabis business were to have a presence on a social media site. Social media is the fastest and most efficient way to advertise to a desired audience. With appropriate regulatory oversight and within the confines of the changing law, social media sites may start to feel pressure to allow more advertising from cannabis brands.

A Petition has been generated to bring META, the company that owns Facebook and Instagram among other sites, to discuss the growing frustrations and strict restrictions on their social media platforms. The petition on Change.org has managed to amass 13,000 signatures. Arden Richard, the founder of WeedTube, has been outspoken about the issues saying  “This systematic change won’t come without a fight. Instagram has already begun deleting posts and accounts just for sharing the petition,”. He also stated, “The cannabis industry and community need to come together now for these changes and solutions to happen,”. If not, he fears, “we will be delivering this industry into the hands of mainstream corporations when federal legalization happens.”

Social media companies recognize the magnitude of the legal cannabis community because they have been banning its content nonstop since its inception. However, the changing landscape of the cannabis industry has made their decision to ban their content more difficult. Until federal regulation changes, businesses operating in states that have legalized cannabis will be force banned by the largest advertising platforms in the world.

 

Can Social Media Be Regulated?

In 1996 Congress passed what is known as Section 230 of the Communications Decency Act (CDA) which provides immunity to website publishers for third-party content posted on their websites. The CDA holds that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” This Act passed in 1996, was created in a different time and era, one that could hardly envision how fast the internet would grow in the coming years. In 1996, social media for instance consisted of a little-known social media website called Bolt, the idea of a global world wide web, was still very much in its infancy. The internet was still largely based on dial-up technology, and the government was looking to expand the reach of the internet. This Act is what laid the foundation for the explosion of Social Media, E-commerce, and a society that has grown tethered to the internet.

The advent of Smart-Phones in the late 2000s, coupled with the CDA, set the stage for a society that is constantly tethered to the internet and has allowed companies like Facebook, Twitter, YouTube, and Amazon to carve out niches within our now globally integrated society.   Facebook alone in the 2nd quarter of 2021 has averaged over 1.9 billion daily users.

Recent studs conducted by the Pew Research Center show that “[m]ore than eight in ten Americans get news from digital services”

Large majority of Americans get news on digital devices

While older members of society still rely on news media online, the younger generation, namely those 18-29 years of age, receive their news via social media.

Online, most turn to news websites except for the youngest, who are more likely to use social media

The role Social Media plays in the lives of the younger generation needs to be recognized. Social Media has grown at a far greater rate than anyone could imagine. Currently, Social Media operates under its modus operandi, completely free of government interference due to its classification as a private entity, and its protection under Section 230.

Throughout the 20th century when Television News Media dominated the scenes, laws were put into effect to ensure that television and radio broadcasters would be monitored by both the courts and government regulatory commissions. For example, “[t]o maintain a license, stations are required to meet a number of criteria. The equal-time rule, for instance, states that registered candidates running for office must be given equal opportunities for airtime and advertisements at non-cable television and radio stations beginning forty-five days before a primary election and sixty days before a general election.”

What these laws and regulations were put in place for was to ensure that the public interest in broadcasting was protected. To give substance to the public interest standard, Congress has from time to time enacted requirements for what constitutes the public interest in broadcasting. But Congress also gave the FCC broad discretion to formulate and revise the meaning of broadcasters’ public interest obligations as circumstances changed.

The Federal Communications Commission (FCC) authority is constrained by the first amendment but acts as an intermediary that can intervene to correct perceived inadequacies in overall industry performance, but it cannot trample on the broad editorial discretion of licensees. The Supreme Court has continuously upheld the public trustee model of broadcast regulation as constitutional. The criticisms of regulating social media center on the notion that they are purely private entities that do not fall under the purviews of the government, and yet these same issues are what presented themselves in the precedent-setting case of Red Lion Broadcasting Co. v. Federal Communications Commission (1969.  In this case, the court held that “rights of the listeners to information should prevail over those of the broadcasters.” The Court’s holding centered on the public right to information over the rights of a broadcast company to choose what it will share, this is exactly what is at issue today when we look at companies such as Facebook, Twitter, and Snapchat censuring political figures who post views that they feel may be inciteful of anger or violence.

In essence, what these organizations are doing is keeping information and views from the attention of the present-day viewer. The vessel for the information has changed, it is no longer found in television or radio but primarily through social media. Currently, television and broadcast media are restricted by Section 315(a) of the Communications Act and Section 73.1941 of the Commission’s rules which “require that if a station allows a legally qualified candidate for any public office to use its facilities (i.e., make a positive identifiable appearance on the air for at least four seconds), it must give equal opportunities to all other candidates for that office to also use the station.” This is a restriction that is nowhere to be found for Social Media organizations. 

This is not meant to argue for one side or the other but merely to point out that there is a political discourse being stifled by these social media entities, that have shrouded themselves in the veils of a private entity. However, what these companies fail to mention is just how political they truly are. For instance, Facebook proclaims itself to be an unbiased source for all parties, and yet what it fails to mention is that currently, Facebook employs one of the largest lobbyist groups in Washington D.C. Four Facebooks lobbyist have worked directly in the office of House Speaker Pelosi. Pelosi herself has a very direct connection to Facebook, she and her husband own between $550,000 to over $1,000,000 in Facebook stock. None of this is illegal, however, it raises the question of just how unbiased is Facebook.

If the largest source of news for the coming generation is not television, radio, or news publications themselves, but rather Social Media such as Facebook, then how much power should they be allowed to wield without there being some form of regulation? The question being presented here is not a new one, but rather the same question asked in 1969, simply phrased differently. How much information is a citizen entitled to, and at what point does access to that information outweigh the rights of the organization to exercise its editorial discretion? I believe that the answer to that question is the same now as it was in 1969 and that the government ought to take steps similar to those taken with radio and television. What this looks like is ensuring that through Social Media, that the public has access to a significant amount of information on public issues so that its members can make rational political decisions. At the end of that day that it was at stake, the public’s ability to make rational political decisions.

These large Social Media conglomerates such as Facebook and Twitter have long outgrown their place as a private entity, they have grown into a public medium that has tethered itself to the realities of billions of people. Certain aspects of it need to be regulated, mainly those that interfere with the Public Interest, there are ways to regulate this without interfering with the overall First Amendment right of Free Speech for all Americans. Where however Social Media blends being a private forum for all people to express their ideas under firmly stated “terms and conditions”, and being an entity that strays into the political field whether it be by censoring heads of state, or by hiring over $50,000,000 worth of lobbyist in Washington D.C, there need to be some regulations put into place that draw the line that ensures the public still maintains the ability to make rational political decisions. Rational decisions that are not influenced by anyone organization. The time to address this issue is now when there is still a middle ground on how people receive their news and formulate opinions.

Has Social Media Become the Most Addictive Drug We Have Ever Seen?

Before we get started, I want you to take a few minutes and answer the following questions to yourself:

  1. Do you spend a lot of time thinking about social media or planning to use social media?
  2. Do you feel urges to use social media more and more?
  3. Do you use social media to forget about personal problems?
  4. Do you often try to reduce the use of social media without success?
  5. Do you become restless or troubled if unable to use social media?
  6. Do you use social media so much that it has had a negative impact on your job or studies?

How did you answer these questions?  If you answered yes to more than three of these questions then according to the Addiction Center you may have or be developing a Social Media Addiction.  Research has shown that there is an undeniable link between social media use, negative mental health, and low self-esteem.  Negative emotional reactions are not only produced due to the social pressure of sharing things with others but also the comparison of material things and lifestyles that these sites promote.
On Instagram and Facebook, users see curated content – advertisements and posts that are specifically designed to appeal to you based on your interests.  Individuals today unlike any other time in history are seeing how other people live, and how their lifestyles differ significantly from their own.  This sense of self-worth is what is being used to curate information, children at a young age are being taught that if you are not a millionaire then you are not successful, and they are creating barometers of success based on invisible benchmarks, this is leading to an increase in suicide and depression among young adults.

Social Media has become a stimulant whose effects mimic that of someone addicted to gambling, and recreational drugs.  It has been shown that retweets, likes, and shares from these sites affect the dopamine part of the brain that becomes associated with reward. “[I]t’s estimated that people talk about themselves around 30 to 40% of the time; however, social media is all about showing off one’s life and accomplishments, so people talk about themselves a staggering 80% of the time. When a person posts a picture and gets positive social feedback, it stimulates the brain to release dopamine, which again rewards that behavior and perpetuates the social media habit.”  “Chasing the high”, is a common theme among individuals with addictive personalities, and when you see people on Social Media posting every aspect of their lives, from the meal they ate to their weekend getaway, and everything in between, that is what your chasing, but the high is the satisfaction of other people liking your post.  We have all been there you post a picture or a moment of great importance in your life, and the likes and reactions start pouring in, the reaction you garner from that love, differs significantly from the reaction you get when there is no reaction.  A recent Harvard study showed that “the act of disclosing information about oneself activates the same part of the brain that is associated with the sensation of pleasure, the same pleasure that we get from eating food, getting money or having even had sex.” Our brains have become to associate self-disclosure with being a rewarding experience.  Ask yourself when was the last time you posted something about a family or friend who died, why was this moment of sadness worth sharing with the world?  Researchers in this Harvard Study found that “when people got to share their thoughts with a friend or family member, there was a larger amount of activity in the reward region of their brain, and less of a reward sensation when they were told their thoughts would be kept private.”

“The social nature of our brains is biologically based,” said lead researcher Matthew Lieberman, Ph.D., a UCLA professor of psychology and psychiatry and biobehavioral sciences. This in itself helps you to understand where Social Media has gone to, it has evolved into a system that takes advantage of our biological makeup, “although Facebook might not have been designed with the dorsomedial prefrontal cortex in mind, the social network is very much in sync with how our brains are wired.” There is a reason when your mind is idling the first thing it wants to do is to check Social Media, Liberman one of the founders of the study of social cognitive neuroscience explains that “When I want to take a break from work, the brain network that comes on is the same network we use when we’re looking through our Facebook timeline and seeing what our friends are up to. . . That’s what our brain wants to do, especially when we take a break from work that requires other brain networks.”

This is a very real issue, that has very real consequences.  The suicide rate for children and teens is rising.  According to a September 2020 report by the U.S. Department of Health and Human Services, the suicide rate for pediatric patients rose 57.4% from 2007 to 2018. It is the second-largest cause of death in children, falling short only of accidents.  Teens in the U.S. who spend more than 3 hours a day on social media may be at a heightened risk for mental health issues, according to a 2019 study in JAMA Psychiatry. The study, which was adjusted for previous mental health diagnoses, concludes that while adolescents using social media more intensively have an increased risk of internalizing problems or reporting mental health concerns, more research is needed on “whether setting limits on daily social media use, increasing media literacy, and redesigning social media platforms are effective means of reducing the burden of mental health problems in this population.” Social Media has become a coping mechanism for some to deal with their stress, loneliness, or depression.  We have all come into contact with someone who posts their entire life on social media, and more often than not we might brush it off, even make a crude joke, but in fact, this is someone who is hurting and looking for help in a place that does not offer any solitude.

I write about this to emphasize a very real, and dangerous issue that is growing worse every single day.  For far too long Social Media have hidden behind a shield of immunity.

Section 230, a provision of the 1996 Communications Decency Act that shields social media companies from liability for content posted by their users and allows them to remove lawful but objectionable posts.  Section 230 states that “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider” (47 U.S.C. § 230)

In 1996 when this Law was introduced and passed, the internet was still in its infancy, and no one at that time could have ever envisioned how big it would become.  At this point, Social Media Corporations operate in an almost Omnipotent capacity.  Creating their governing boards, and moderators to filter out negative information.  However, while the focus is often on the information being put out by the users what gets ignored is how that same information gets directed to the consumer.  You see Facebook, Snap Chat, Twitter, even YouTube, rely on the consumer commonly known as “influencers” to direct posts, and information to the consumer also known as the “User”, to direct advertisement and product placement.  To accomplish their goals which at the end of the day is the same as anyone Corporation to create a profit, information is directed at a person that will keep their attention.  At this point, there are little to no regulations, on how information is directed at an individual.  For instance, the FCC has rules in place that “limits the number of time broadcasters, cable operators, and satellite providers can devote to advertisements during children’s programs.” however, there are no such rules when dealing with children, there is only one such case in which the FTC has levied any fines for directed content at Children. Yet this suit was based more on  the notion that Google through their subsidiary YouTube “illegally collected personal information from children without their parents’ consent.”  When dealing with an advertisement for children Google itself sets the parameters.

Social Media has grown too large for itself and has far outgrown its place as a private entity that cannot be regulated.  The FCC was created in 1934 to replace the outdated Federal Radio Commission an outdated entity.  Therefore, just as it was recognized in 1934 that technology calls for change, today we need to call on Congress to regulate Social Media, it is not too farfetched to say that our Children and our Children’s futures depend on this.

In my next blog, I will post how regulation on Social Media could look and explain in more detail how Social Media has grown too big for itself.

 

 

Why it Matters: Lawyers, the Spread of Misinformation and Social Media

It is important to remember the role lawyers play in and how the public views public figures, attorneys and the judicial system. This is especially true when posts are made on social media platforms or when statements are made available to the public in any manner. Many recent occurrences bring this important situation to light, most notably Rudy Giuliani’s unproven campaign regarding the “Big Lie” a/k/a the stolen election. Attorneys and important public figures may need to be held to a higher standard of care and accountability due to the public’s heavy reliance on the truth of their statements. Because of this reliance, social media companies, and the Courts, are forced into action to curb the spread of false information.

Facts on the spread of information on the internet. So many people now rely on social media as a way of communication and as a news source, which can sometimes be their only source. Information online can now spread faster than any other news source in history. The science behind the spread of information online, is quite astounding (and there is actual science behind it!).

A Massachusetts Institute of Technology (MIT) study found that “It took the truth about six times as long as falsehood to reach 1500 people and 20 times as long as falsehood to reach a cascade depth of 10. As the truth never diffused beyond a depth of 10, we saw that falsehood reached a depth of 19 nearly 10 times faster than the truth reached a depth of 10.” These numbers show that false information spreads faster, farther and deeper than the truth. All users of social media are exposed and susceptible to false information, including attorneys, and our ability to discern true versus false information has become distorted leaving many users vulnerable.

 

 

What causes of the spread of misinformation and who is susceptible? The American Psychological Association has published information on the causes of misinformation spreading and who is most susceptible. Researchers looked at individual differences and identified that “[b]roadly, political conservativism and lower levels of educational attainment are correlated with an increase in susceptibility to fake news.” Further, “[s]ix ‘degrees of manipulation’—impersonation, conspiracy, emotion, polarization, discrediting, and trolling—are used to spread misinformation and disinformation.” A false news story may quote a fake expert, use emotional language, or propose a conspiracy theory in order to manipulate readers.

People use the following five criteria to decide whether information is true: 1) compatibility with other known information, 2) credibility of the source, 3) whether others believe it, 4) whether the information is internally consistent, and 5) whether there is supporting evidence. The study also shows that people are more likely to accept misinformation as fact if it’s easy to hear or read. “We want people to understand that disinformation is fundamentally exploitative—that it tries to use our religion, our patriotism, and our desire for justice to outrage us and to dupe us into faulty reasoning,” says Peter Adams, News Literacy Project’s senior vice president of education. “Much of that is a psychological phenomenon.”This information may be helpful in understanding how a once highly respected lawyer and politician, is now the focus of discipline-committee-attention.

Rudy Giuliani. Social media is important to the legal profession because the court systems and attorneys use it to reach the public and potential clients. Consequently, it is of utmost importance to respect social media and to know how it functions to make it work for the intended purpose. Rudy Giuliani, attorney, former Mayor of New York City and personal counsel to President Trump, is the most prominent and current example of an attorney who used social media to spread misinformation. Giuliani is currently involved in numerous lawsuits for spewing a theory of election fraud that was ultimately disproved. Intriguingly, even though the claims lacked evidence to support them and were ultimately dispelled by the Judicial System, members of society believed these claims as truth while a large number of people still believe them.

Giuliani made these claims on mainstream media, his YouTube channel and seemingly anyone that would listen including Fox News. An anonymous source at Fox News stated, “We turned so far right we went crazy.” Giuliani reportedly earned monies making plugs to sell items during interviews and on his YouTube channel while making the statements at issue. Smartmatic filed suit against Rudy Giuliani and Fox News amongst others which is separate from the Dominion suit filed against Giuliani. These two suits encompass the same general claims, that Giuliani made false statements that the 2020 US Presidential election was stolen resulting in irreputable harm to companies.

Both the NYC Bar Association and the New York State Bar Association filed complaints against Mr. Giuliani requesting an investigation into his conduct.

The Appellate Division’s First Judicial Department of the New York Supreme Court suspended Giuliani’s law license on an interim basis in a June 24, 2021 decision concluding that his conduct threatened public interest. Not only did his behavior threaten public interest but it also tarnished the reputation of lawyers and the judicial system as a whole. The opinion further states, “When false statements are made by an attorney, it also erodes public confidence in the legal profession and its role as a crucial source of reliable information.”

Other examples of attorney epic-fails. An Illinois attorney wrote in her blog post referring to a judge as being “a total asshole,” and in another blog entry referred to a judge as “Judge Clueless.” The attorney also wrote about client specific cases and identified her clients by jail number or first name. That attorney received a 60 days suspension and was terminated from her employment as an Assistant Public Defender. Here, the attorney’s opinion, while it is hers and she has a right to it, could influence other court system employees, attorneys, judges or lay people entering the judicial system for whatever reason resulting in an influenced preconceived notion of the judge and the judge’s ability to render decisions in a case.

A Tennessee lawyer was suspended for 60 days for giving Facebook advise on how to kill and ex-boyfriend and make it look like self-defense while providing information on the new stand your ground law and the castle doctrine. Because a Florida lawyer made disparaging statements and accusations of judicial witchcraft, that attorney was disbarred and arrested!

Lawyers are held to a higher standard. Period.  While Giuliani’s attorneys are arguing his right to make those statements are protected under his First Amendment right to free speech, “lawyers, as professionals, are subjected to speech restrictions that would not ordinarily apply to lay persons.” Especially, when it comes to judiciary review committees.

The legal system of attorneys is primarily a self-governing entity due to the professional legal standards inherent in the job. Attorneys swear an oath to support the Constitution of the United States before admission to practice. Attorneys are expected to uphold certain legal standards, enforce other attorneys to uphold those legal standards and, if necessary, report another attorney’s actions. A grievance committee is used to deter and investigate unethical conduct which can result in sanctions or commencement of a formal disciplinary proceeding at the Appellate Court level, as in the case of Mr. Giuliani’s interim suspension.

Rules to keep in mind as a practicing attorney. These rules come from the NY Rules of professional conduct. 

  • Rule 4.1 governs Truthfulness in Statements to Others and reads, in part, “In the course of representing a client, a lawyer shall not knowingly make a false statement of fact or law to a third person.”
  • Rule 8.3 governs Reporting Professional Misconduct and reads in part, “(a) A lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation.”
  • Rule 8.4 governs Misconduct and reads, in part, “A lawyer or law firm shall not: … (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation” and “(h) engage in any other conduct that adversely reflects on the lawyer’s fitness as a lawyer.”

What can be done to curb the spread of misinformation going forward? It seems inevitable that something has to give when it comes to social media and the downward spiral that may or may not hit rock bottom but only time will tell. Social media plays an important role in how our society communicates, shares ideas and inspires others. But is self-regulation enough? Should there be heightened standards for persons of influence? Should social media be regulated or are the companies sufficiently regulating themselves? Can the government work together with social media platforms to achieve a higher standard? Is judicial witchcraft even a thing? Regardless, your license to practice law is what it’s all about so choose your words wisely.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trash and Cash! The Market Value of Financial Blogging.

On February 2, 2014, Bloomberg News reported, in an article entitled “Investors Bet Against Stock in Harvard Professor’s Blog,” by John Hechinger and Jesse Westbrook, that at least five investors successfully shorted the stock of a media advertising company, Blinkx, after the company received a scathing review (if not a flat out allegation of fraud) by a Harvard professor, Benjamin Edelman on his blog post: “The Darker Side of Blinkx.” Two US based investors who did not want to have their identity revealed commissioned Professor Edelman’s research into the company’s practices. The stock of the company fell by a third of its value in the days following publication of the blog on January 28, 2014. Five large investors took a short position on Blinkx stock just before the release of professor Edelman’s blog. The obvious implication is that anonymous investors commissioned a “hit piece” on a company that they were planning to short.

Is the Harvard professor’s blog a case of “trash and cash?” The answer to that would hinge on when the investors that commissioned this research took a short position on the stocks and whether they knew that the piece would be published. Professor Edelman claims in the amended disclosures on his blog that he was not hired to publish his results after giving them to the clients, but he did have a clause in the contract that conditioned the research on his ability to publish. Would investors not have a reason to know that the results would be published by a prolific blogger who, as a professor at Harvard Business School, has serious readership and credibility? Would the investors not know the piece would be published soon, so as to assure its relevance?

Another problem is with the possibility that the information on which the professor relied could be “insider” information or incorrect misleading information. The question is whether all the information that professor Edelman used was publically available or whether he may have used information and sources that a journalist would be allowed to use, but an investor would be prohibited. Bloggers and publishers are now considered journalists and can not only protect their sources but also can engage (and the assumption is that they would) in the type of investigative reporting that would uncover things not known to the public. Do regulatory agencies have a way of connecting these “hit pieces” with deliberate market manipulation? Do SEC and FINDRA need to read all influential business blogs that have impact on market prices and must the reporters disclose who received the information before it was published?

In his blog post, the professor actually goes so far as to recommend shorting the stock. This seems to take his analysis of “historic and current practices” one step further than reporting and into the territory of dolling out investment advice (or a self-fulfilling prophecy). Could the professor be found complicit in the market manipulation not as a blogger or a journalist, but as a financial advisor? The rise of social media has certainly created new challenges for securities regulators.

 

Should Blogs Enjoy the Same Defamation Immunity as Newspapers?

Blog posts are not entitled to the same immunity from libel as are newspapers or other periodicals… at least in Texas.  The issue was resolved in a district court case steming from posts made by a former patient of the University Behavioral Health of Denton (UBH), “a free standing psychiatric hospital specializing in mental health and chemical dependancy care.”    Brenda Wells, a former patient of the hospital, among other things maintained a blog on which she posted defamatory comments that accused hospital staff of unprofessional and even criminal conduct. Wells tried to defend the claim arguing, that not only were the blogs not defamatory, but  that her blogs were protected under a Texas Law, which prohibits libel claims against newspapers and periodicals.  Wells argued that her blogs, which were published, were akin to the type of media receiving defamation immunity and therefore should be protected under the law.  The U.S. Discrtice Court for the Eastern District of North Carolina disagreed, finding that because ” “[p]ostings on the blog are not published at regular intervals. They are not composed of articles, news items, or the like.”

The decision in the case, Ascend Health Corp. v. Wells (here), may make sense in this particular instances, but I can think of a lot of blogs that have the sophisticated and regular type of content of which many newspapers and periodicals boast.   What about blogs that are maintained by newspaper reporters?  Such blogs would not receive immunity under this case.  This is one decision that I think should be revisited.  Thoughts?