In a recent post, we discussed some of the implications to Florida investors as companies begin to use social media in their communications with investors. Such communications might encourage more investors to stay informed about their securities holdings. However, there could also be a downside.

As a preliminary matter, there might be a perception among many readers that social media disclosures — even about companies — might be more conversational, rather than substantive. The user interface platforms created by social media programs like Facebook or Twitter may also discourage disclosures that are lengthy or too factual. Finally, the instantaneous delivery style of social media posts may lead to potential misunderstandings, as today’s post illustrates.

A recent tweet from The Associated Press’ Twitter account contained false information about an report of two bombings at the White House which caused injury to President Barack Obama. The false disclosure created a visible reaction in securities markets, as evidenced by a sudden dive of about 1 percent in the S&P 500 Index.

The AP corrected the false tweet within a few minutes. However, in the three-minute period immediately following the erroneous tweet, a staggering amount of trading activity occurred, involving more than 620,000 S&P 500 futures contracts and 180,000 10-year Treasury futures contracts.

Some industry experts believe that additional restrictions may be required of social media investment-related information, although it is unclear whether the U.S. Securities and Exchange Commission will take action because of this incident. A securities fraud attorney might caution investors to rely on material representations the old-fashioned way: through a stockbroker or brokerage firm.

Source:, “Analysis: False White House tweet exposes instant trading dangers,” Steven C. Johnson, April 23, 2013

EN   ES   PT     

Miami Office
Grand Bay Plaza
2665 S. Bayshore Drive
Penthouse 2B
Miami, FL 33133
Telephone: 786.628.8236

Los Angeles Office
Available by Appointment
2029 Century Park East
Century Plaza Tower
Suite 400N
Los Angeles, CA 90067
Telephone: 424.544.7930

New York City Office
Available by Appointment
14 Wall St, 20th Floor
New York, NY 10005
Telephone: 917.382.5217

West Palm Beach Office
Northbridge Centre
515 N. Flagler Drive, Suite P-300
West Palm Beach, FL 33401
Telephone: 561.475.2887

Detroit Office
41000 Woodward Avenue,
Suite 350 East
Bloomfield Hills, Mi 48304
Telephone: 248.368.0182