#Blogging had evolved significantly from the old days when individuals used this platform to share their strong opinions. Now brands and busi
Explore tagged Tumblr posts
Link
Blogging had evolved significantly from the old days when individuals used this platform to share their strong opinions. Now, brands and businesses are using
#drive traffic to your website#Blogging had evolved significantly from the old days when individuals used this platform to share their strong opinions. Now brands and busi#SEO#content marketing#traffic on your website#Blogging#Blog Definition Or Blog Meaning#How To Increased Traffic On Our Website#What Is Blog#What Is Blogging
0 notes
Text
How to go to gaming youtube
Why You Should really Start Your Gaming Weblog On GameSkinny (Rather Of WordPress)
On-line Gambling Sites covers the entire sector of gaming more than the Web. Scump is qualified American Get in touch with of Duty player. He is a two time MLG X Games gold medalist and is sponsored by several gaming hardware firms, which includes Turtle Beach and Scuf Gaming. He is also sponsored by Loot Crate, Gymshark, and Brisk Mate. As of September 2016, Scump has won $262,293, of which practically $one hundred,000 was won in Contact of Duty: Advanced Warfare.
With sophisticated design like cool blue lighting, the Lenovo IdeaPad L340 Gaming is an excellent mainstream laptop for the modern multi-tasker and undercover gamer. Obtainable in 15-inch or 17-inch models, the Lenovo IdeaPad L340 Gaming has subsequent-gen characteristics such as up to the latest 9th Gen Intel Core i7 mobile processor, NVIDIA GeForce GTX 1650 GPUs and jaw-dropping Dolby Audio hardwired into the laptop to take transportable gaming into a further dimension.
You have played thousands of distinct board games, yes that is proper not hundreds, but thousands. You are a member of a number of gaming groups, and you've come to realise that diverse groups have different personalities and special dynamics. You realize what style of games you love and precise mechanics that you do and don't like in a game. You never actively preach or tell people about board games, but when asked you are an ambassador for the genre and with your vast understanding you can normally add thoughtful discussion and predictions concerning games you are yet to play. Your collection is the fantastic variety of games that you like. It is not straightforward for a new game to make it into your collection, and you have a defined a rigorous trial of fire that any game should meet to make it effectively into your collection.
Why we like it: The video gaming podcast typically focuses on indie titles, given that that is what the hosts are personally interested in, but at times they also bring a wider range of games to the table for discussion. Idle Thumbs is a thoughtful podcast that puts a bit additional emphasis on style and criticism when analyzing the games. If Idle Thumbs” clicks with you, you can also check out the podcast Three Moves Ahead” about war and strategy games, it was developed by the exact same guys.
youtube
Irrespective of whether you require some thing to cool you down on a hot summer day or you basically want to assist your gaming console cool down and preventing overheating your gear, the SIMBR Portable USB Mini Desk Fan can be a really handy gift. testul How to start a gaming blog Initial, its six-inch fan blades are substantially bigger than other varieties of USB mini fans. Second, its effective motor is surprisingly quiet, generating less than 30 decibels of noise. Its one of a kind design and style makes it possible for the SIMBR to be rotated a full 360 degrees, ensuring you get optimum airflows wherever you point the desk fan to. The triangular base and metal frame are welcome options.
Tank is a well-optimized cost-free gaming WordPress theme that comes with a responsive layout that displays your content beautifully on phones, widescreen monitors, and everything in amongst. With the enable of WooCommerce assistance, you can easily get started an on the internet enterprise easily. The theme comes with a impressive layout that is infused with charcoal black color that provides the web-site a pretty royal outlook. This theme comes with a style that is exceptional and aids to appeal to men and women with an affinity for the army and tanks in specific.
And finally, in order to hold your audience closer to you, do not neglect to add a get in touch with form and subscription kind to your gaming site. Operating a gaming blog let your readers comment on your publications. Never miss a likelihood to reply to the comments of your readers. This will show that you care about the time that individuals spent to look by way of your data.
The gaming labor market place is evolving like a lot of industries impacted by the development of technologies. Jobs for game developer may well be declining, but jobs in other gaming-connected fields are developing. This is reflective of the altering nature of video games and the gaming industry. The definition of video game and video game creator is totally diverse. And the labor market reflects this.
Like gaming? With the support of a screen capture device (or a video camera) you can pass on your knowledge on a unique game (or level) and entertain folks at the same time. Video games as a spectator sport is a comparatively new phenomenon, but immensely preferred. Take Twitch, where millions of gamers collect every month. Some gamers have even turn into celebrities as a result.
PenNews is a modern day and clever responsive WordPress multiconcept news & magazine web page theme. It is a highly effective platform for webmasters across the spectrum. Regardless of industry or niche, PenNews has the demos and templates to make your life less difficult. You don't require to know any coding to perform the WP Bakery like a pro. Great post types match distinctive stories, to often provide the message appropriate. Gaming magazines and news blogs are a great fit for PenNews.
What You Should Have Put The Teachers On READY
The tactile satisfaction of the mechanical keyboards is often missing in membrane keyboards. It mimics the really feel of writing on an old school typewriter, like in the previous. Now, this does not imply that the modern day mechanical keyboards are missing characteristics. They are packed with the points that the buyer desires for every day use and even in most cases for gaming as well.
These historical cloud gaming solutions, even though revolutionary, have been generally somewhat niche. But will cloud gaming go mainstream any time soon? Both Microsoft and Google have recently announced forays into the sector, with trials of Project xCloud” and Project Stream” respectively. Even Nintendo, a far a lot more classic gaming brand, has established some key cloud inroads on its platforms. Streamed versions of demanding games like Assassin's Creed Odyssey and Resident Evil 7 - initially designed for Xbox, PlayStation and Computer - are becoming obtainable on the comparatively weak Nintendo Switch hardware. If the actions of the big players are something to go by, gaming on demand could get really serious traction more than the subsequent decade.
Tuned and designed for gaming internet sites, Arcane delivers an exquisite gaming knowledge unmatched by lots of themes out there. This dedicated gaming WordPress theme offers you with the proper tools to generate gaming communities of enormous proportions. From types teams to managing tournaments, content material sharing, custom user and group profiles, you can do it all with this plugin.
Never you wish you had your very personal arcade machine right in the comfort of your dwelling? What if we told you that we have found a gaming technique that is not only reminiscent of retro gaming arcades but is also designed to fit suitable in your hands? That is what the My Arcade Retro Arcade Machine Handheld Gaming Method is all about. This handheld gaming console is developed pretty significantly like an old-college gaming arcade full with genuine D-buttons and joystick. Even so, its compact style makes it a really handy arcade complete with 200 of your favourite computer games of the 80s and 90s.
If you happen to be in the industry for more affordable or more affordable games, make confident that you check the Hot Bargains section of the web-site. Green Man Gaming involves a hyperlink to that page on all its pages. You can look at the Deal of the Day or at existing specials that let you save up to 75% off the MSRP on well-liked games. The Hot Deals section also involves some VIP specials selected by best games from about the world.
0 notes
Text
Seven Benefits Of SEO 2019 That May Change Your Perspective
This is important to focus upon SEO professional if you want to bring more traffic in order to your site and increase the particular visitors of your content. For blog websites the greatest SEO practice would be in order to set the title of your own post in a heading1 label. Search engines is the gatekeeper to huge amounts of traffic and qualified prospects - search engine optimization (SEO) opens the doors. Simply because long as they are gained naturally, inbound links are most likely the most dependable authority contractors in the world of SEARCH ENGINE OPTIMIZATION. All of us call this new methodology AdaptiveSEO so that as its title suggests, it is made in order to adapt to the evolving plus sometimes unexpected changes in research algorithms. Several get confused in this region of SEO article writing suggestions for either they in place too little or maybe the particular wrong kind of keywords, or even they mention the keyword method too much which is occasionally called keyword over stuffing. Social SEARCH ENGINE OPTIMIZATION isn't a separate branch associated with SEO and it won't quickly be replacing traditional SEO, yet social signals are becoming significantly incorporated into search engine methods. Perhaps the particular most important aspect of research engine optimization is how a person can actually leverage SEO in order to assist drive more relevant visitors, leads, and sales for your own business. Just browse through the various types of our SEO blog site to find those important on-page ranking factors. According to him, key phrases have already lost their significance and in 2019 this pattern would only get stronger. Seo (SEO) is definitely the most efficient way in order to drive traffic to your site. PeepCon (which stands for The Householder's Conference”) seeks to teach workable SEO and digital marketing training. See how Matthew had taken a website from zero in order to one million visits in much less than a year, using the mix of blogging, content marketing and advertising, and SEO. Solid being familiar with of the keywords, questions, plus phrases your ideal customers employ to find your products in addition to services is critical to efficient SEO. 34. Applying SEO practices (such keyword optimization) to social networking improves discoverability when users search interpersonal platforms like Facebook and Youtube . com. Onsite SEARCH ENGINE OPTIMIZATION Guide — If you the particular actual link, you will observe a opt-in button where a person can download the Onsite SEARCH ENGINE OPTIMIZATION Guide. ” Matt Diggity will a lot of testing upon his own sites, which means this guideline reflects what on page strategies are working best for your pet. One important aspect associated with taking care of SEO is definitely identifying issues that are harming search engine ranking positions plus reducing the traffic you receive through SERPs. User-generated content like reviews assist SEO through SMO, because this often comes in the type of social shares, likes, or even commenting, or common threads such as hashtags that point back in the direction of a brand. Local SEARCH ENGINE OPTIMIZATION services offer a very focused online marketing approach, (it's not really like dropping off brochures upon front-porch steps or paying for a good ad in a local newspapers that could or may not really be seen by a feasible client that is actually fascinated in your products or services). Selecting the most appropriate key phrases is critical for successful SEARCH ENGINE OPTIMIZATION and it is easy in order to choose the wrong ones through falling into the trap associated with optimization. Lookup engine optimisation, or SEO, is the procedure of enhancing your site's position in search results. Web Marketing SEO, and in specific, Google SEO is the essential. Get into your competitor's URL into the particular SEMRush search bar and you should become provided with a list associated with SEO keywords, with their search positions and traffic. About: Brighton SEO is made up of courses and a one-day search marketing conference. Before this change, the greatest practice was to avoid concealed content at any cost since it wasn't as effective with regard to SEO (it was either as well much to crawl for the particular bot in some instances or even given less important by Search engines in others). This is due to the particular fact that you will require contents to be submitted in order to the websites for whom a person are working as an SEARCH ENGINE OPTIMIZATION, when you build the hyperlinks, you will need to offer the profile information, and a person will also have to supply articles for submissions as nicely as numerous other types associated with written work. If you've actually searched for something online (and most of us have), a person already know read more regarding SEO than you think a person do. We all already see this trend within several places, like extremely specific targeting of social ads : some brands still approach SEARCH ENGINE OPTIMIZATION and content creation with the one-size-fits all attitude. Without the doubt, one of the greatest trends that has already started to take place and may continue well into 2018 will be the consolidation of niche MarTech gamers by larger content cloud suppliers, with the role and significance of SEO increasing significantly all through this transformation. SEO Internet marketing offers major components, which develop the particular website traffic, and top research engine rankings. SEO is brief for Seo, and there will be nothing really mystical about this particular. You might have heard the lot about SEO and just how it works, but basically exactly what is a measurable, repeatable procedure which is used to send out signals to search engines that will the pages are worth displaying in Google's index. Topic clusters possess been lauded since Here's What Industry Insiders Say About SEO 2019 the future associated with SEO and content strategy, yet are widely underreported on (so now's the time to hit! ) 93% of B2B companies use content marketing. Teresa Walsh, Marketing Professional at automobile site, Cazana, forecasts that hyper organic targeting will increase its importance in 2019 with more location search plus more voice search. We get to the particular bottom of on-page SEO difficulties in order for search motors to clearly see what your own website is all about. SEO requires you to continuously become a student because of just how quickly the algorithms of lookup engine companies change. Google's punishing methods probably class pages as some thing akin to a poor UX if they meet certain detectable criteria e. g. lack associated with reputation or old-school SEO stuff such as keyword stuffing a site. If you no longer look after SEO, you may get lost among the trillions of links out there. Heading forward SEOs have to become able to quantitatively show the particular value of their online advertising by identifying and implementing Crucial Performance Indicators (KPIs) that may demonstrate the value added simply by their SEO initiatives. The topic cluster model will be your way forward in SEARCH ENGINE OPTIMIZATION this year, but it's not really the only method to obtain your website content to position higher once it's been developed. WIthout simple SEO in location, your business may not always be a result on the research engines when a customer is usually specifically searching for your enterprise! SEO information can help improve your sociable efforts, and social media may help with the search rankings. Within his book Ultimate Explained Customization Your Website, SEO and web marketing expert Jon Rognerud displays you how to create a top of the line website and get top rank on all search engines. 00: 38 SEO is usually heading towards voice search. SpyFu is usually really a paid tool that will uses 11 years of historic data to help you discover your competitors' most profitable key phrases and the keywords they've utilized for SEO and ads. The fact is that on-site navigation hackers like search bar with smart autocomplete, internal linking with point texts or immediate customer assistance boost both UX and SEARCH ENGINE OPTIMIZATION. Even though it is tough to assume about the adjustments that might take place throughout 2019, but we know intended for sure what SEO trends regarding 2018 will take greater dominance in 2019. The main stage of SEO is to end up being friendly both to users plus search engines. Based in Colorado springs municipal airport terminal, CO, SocialSEO has been the particular preeminent digital marketing firm within Colorado since 1996. Although the SEARCH ENGINE OPTIMIZATION experts provide great SEO providers for their clients, there are usually a few who ruin the particular internet design industry through their particular greed in marketing efforts plus manipulate search engine rank. SEARCH ENGINE OPTIMIZATION may target different kinds associated with search, including image search, regional search, video search, academic research, news search and industry-specific top to bottom search engines. The benefits of powerful digital marketing plans are very much proven over the board nevertheless when it comes to firms within the photography industry this SEO aspects of the marketing technique really do make all associated with the difference to helping a new photographer stand out from typically the crowd. HISTORY LESSON: Old SEARCH ENGINE OPTIMIZATION advice suggested you connect along with websites and trade links along with each other True, a huge genuine site linking to you may boost up your ranking, yet, it's not going to assist your relevancy score when the particular linked content isn't related in order to the website sharing it. 10. Quality back back links need to be built upward to your site for efficient SEO. SEO is about attracting individuals to your site to start with by making sure this shows up searching queries. While her business, web traffic, and even customer base grow, Sue may require some outside support with regard to keeping her SEO on observe so she could sell typically the best shoes on the prevent. Whilst links continue to be essential and it's incredibly difficult in order to rank well without links through other websites, content and on-page SEO has become increasingly essential. For businesses searching to raise their search ranks, what this means is that will a comprehensive social media technique may be in order - within addition to all of the particular usual SEO tactics. Because of protocol changes and the trend in order to more local searches, it actually is no longer an huge cost to implement good SEARCH ENGINE OPTIMIZATION. Whether you're killing it along with SEO, or struggling to break Blog9T the very first page, a good SEO audit can assist give your own rankings a shot within the particular arm. According to web marketing experts, the impact associated with AI and Voice Browse SEARCH ENGINE OPTIMIZATION can be expected in 2019 after that. Gowns it. If you'd like in order to speak to us about a good SEO campaign, or even multilingual SEO marketing and keyword analysis then get in touch associated with just start a live talk if we're around. Moreover, Google will keep on to elevate the importance associated with usability and technical SEO aspects, for example site security, page rate, mobile friendliness, and navigability. As a consultant, he or she has helped many different businesses—including, Lonely Planet, Zillow, Tower Information, and literally numerous medium plus small businesses—with SEO and online-marketing advice. SEO is really the shortened phrase for search motor optimization. I believe SEO within 2019 will largely be such as SEO in 2018, with the particular exception of some big” Search engines update that wipes out sufficient websites to make people think the algorithms have grown significantly smarter. SEARCH ENGINE OPTIMIZATION works by optimizing a cyberspace pages, conducting keyword research, plus earning inbound links. The organization offers excellent SEO packages that will help rank the clients' site within top three pages associated with search engine pages. That can make SEO an ideal lead era tool, because when searchers stick to links back to your web site, you have the chance in order to convert them to leads, plus later make sales. Whenever asked to point out ideas that are unique towards the particular web, most people will arrive up with two main types: SEO and social media. How many links do a person need for good off-page SEARCH ENGINE OPTIMIZATION? If you are carrying out a professional SEO audit for any true business, you are going in order to have to think like the Google Search Quality Rater Plus a Google search engineer to offer real long-term value to the client. 44. Give your own social media profiles an SEARCH ENGINE OPTIMIZATION boost. 10% of our experts believe that will there's likely to be the lot of focus on cellular in 2019, as older SEOs realize optimizing for desktop is usually pointless. White hat SEO is not really just about following guidelines, yet is about ensuring that the particular content the search engines indexes and eventually ranks could be the same content the user will see. Based on SEO software program company Moz's bi-yearly survey upon search engine ranking factors, the particular titles on your page are usually one of the nine almost all important considerations a search motor makes. Having an SEO approach that effectively promotes your picture taking business, driving new traffic in addition to taking into consideration the requires of the site visitors even though you concentrate on perfecting your own art is a really strong tool. SEO is Lookup Engine Optimization and it is usually required for make a internet site view-able. And you may see the section on exactly where to use keywords for even more information on integrating these key phrases into your SEO content technique. 22. Use social media in order to boost local SEO. SEO is the acronym for Seo. Even though certain techniques of SEO content material remain the same, like not really compromising on quality; there are usually definitely techniques which have developed from the past and a person should find out whether your own SEO articles writing services are usually very well aware of that will or not. SEO service suppliers are specialized in increasing the particular traffic to your site simply by increasing your position in the particular search engine ranking positions. Bring in international people to your internet sites with these SEO tips. The top challenges within organic SEO are link developing (easy-to-get links no more possess much value) and keyword analysis (the low-hanging fruit is lengthy gone). For illustration, the phrase ‘SEO tips' is furthermore included inside the less aggressive phrase ‘SEO tips 2019', which usually is searched for too. Our six experts reveal their favorite SEO tips and even tactics for building big targeted traffic in 2018. Yes, we all know it's still June plus we know it's only 2018 but if you haven't began planning and researching key tendencies which will affect you SEARCH ENGINE OPTIMIZATION in 2019 you could currently be falling behind. We furthermore take a look at just how new technologies like AI plus Voice search will begin in order to impact more on SEO since we move nearer to 2019 and beyond. Whenever every nation across the entire world is busy in making their own due contribution within the growth sector in their own method by taking the route associated with SEO service and online advertising, Singapore cannot stop stand nevertheless in one point. By 2019, articles marketing is set to turn out to be an industry worth $300 billion dollars. Off page SEO pertains to the strategies performed past your website that can end up being used to improve your research engine rankings. Due in order to the success of inbound advertising and SEO, more marketers are usually dedicated to improving their position over other tactics. The best way to focus on these customers is by delivering high-quality SEO content that offers genuine and useful information toward the readers. Another method provides a different page based upon whether the page is becoming requested with a human customer or a search engine, the strategy known as cloaking One more category sometimes used is greyish hat SEO This is within between black hat and whitened hat approaches, where the strategies employed avoid the site getting penalized, but do not work in producing the best content material for users. Performing SEO upon your own websites is the great method to practice plus hone your SEO ability. We optimize your web site both of internal and exterior factors thats Google's engine believe in and reliable for top rank search result, Gurantee your SEARCH ENGINE OPTIMIZATION ranking No succeed can refundable. Looking deeper: An SEARCH ENGINE OPTIMIZATION cost often means one associated with two things: the investment within your organic search strategy, or exactly how much you pay for compensated search engine marketing (SEM) solutions like Google AdWords. All of us are dealing with new methods designed to target old design SEO tactics and that concentrate around the truism that DOMAIN NAME ‘REPUTATION' plus Plenty of WEB PAGES plus SEO equals Plenty associated with Keywords equals LOTS of Search engines traffic. BrightonSEO is a one-day search advertising conference and series of education courses held, unsurprisingly, in Brighton. From narrowing straight down target markets to changing the particular way content is written, AI and voice search will possess a continuous effect on SEARCH ENGINE OPTIMIZATION moving forward. One aspect of SEO is usually link building, which we may discuss slightly below, which frequently leads to thin content. Applications for typically the 2018-2019 cycle of the SEO Enhance programme are now closed and even will re-open again in Springtime 2019. SEO could be difficult because search engines are constantly reevaluating and changing how these people prioritize search engine results. Moreover, it will help SEARCH ENGINE OPTIMIZATION by gaining backlinks, likes, feedback or shares. Join us for the three-day, one-track conference full associated with forward-thinking, tactical sessions in SEARCH ENGINE OPTIMIZATION, growth marketing, the mobile scenery, analytics, content marketing, and even more. The objective involving SEO is to get the website ranked as high because possible on search engines, like Google. In the event that you are improving user knowledge by focusing primarily on the particular quality of the MC associated with your pages and avoiding -- even removing - old-school SEARCH ENGINE OPTIMIZATION techniques - those certainly are usually positive steps to getting even more traffic from Google in 2018 - and the type associated with content performance Google rewards is definitely in the end largely in least about a satisfying consumer experience. For instance, when I'm logged in to Google+ and I actually search for SEO, I obtain the following in my top 5 search results. Black head wear SEO practice involves breaking just about all of the rules and rules of the search engine. Every time you observe or hear the phrase lookup engine optimization, ” substitute exactly what create quality and indicating relevance” and you'll have the correct mindset permanently SEO work. SEOs conveniently call this effect ‘domain authority' and it appeared in order to be related to ‘PageRank' : the system Google started in order to rank the web within 1998. When you have more time plus are keen to follow the particular SEO industry, subscribe to Moz and Search Engine Land. Integrating these keywords into the article allows you to add range while still retaining SEO energy. SEO firms are able to track almost every aspect of their technique, like increases in rankings, visitors and conversions. The strategies which were the simplest (reciprocal links or directory submissions) perform not work anymore, therefore the particular SEOs spend a lot associated with time trying different approaches. The particular Moz Pro is another place of Tools that check the particular important factors related to your own website's search ranking. Selection of key phrases or phrases plays an essential component in an SEO campaign given that it saves you the pictures in the dark. In 2019 the particular digital marketing companies can anticipate a lot of voice queries, and by 2020, about 50 percent of the searches will become either voice searches or image-based searches. Read our Mobile SEO 2019 Checklist before you decide in order to implement. Typically the first element of optimizing images is definitely including your keywords in typically the image file name (seo_guide. jpg). The inevitable modifications that will occur in SEARCH ENGINE OPTIMIZATION in the near future are usually abolition of keywords stuffing plus spam backlinks, real-time personalized customer support by online marketers, improvement within the quality of visual articles as a result of development of video SEO, optimization associated with websites with conversational keywords plus generating massive quantity of current data. SEARCH ENGINE OPTIMIZATION remains one of the lengthy term marketing strategies that function best for companies that are usually looking to improve their on the internet visibility. I think it as simple as a good example to illustrate an element of onpage SEO or ‘rank modification', that's white hat, totally Google friendly plus not, ever going to trigger you a issue with Search engines. So in case you want to get began which includes basic SEO, the particular first thing that I might recommend would be choosing the set of keywords for every page on your website. Away page, SEO has contrasted along with it. Undoubtedly, off page optimisation is all about link developing, but the quality links plus content. Via a direct incorporation of Google's Search Console, Siteimprove SEO helps you understand how the particular world's most popular search motor and its users see and—more importantly—find your website. On Page Ranking Factors — Moz's on page ranking aspects explains the different on web page elements and their importance within SEO. Surprisingly enough, a new lot of SEOs out presently there do tend to underestimate typically the power of Google Trends The particular tool has a separate "YouTube search" feature, which hides beneath the "Web search" option. An SEO agency may work together with a firm to provide an added viewpoint, when it comes to knowing and developing marketing strategies with regard to different sectors and various forms of business websites. Given the search positions and search volume, SEO may drive considerable traffic and prospects for Grainger. SEO stands for research engine optimization - that very much has stayed the same. But they keep on modifying their algorithms making it hard to rely on one specific tool for SEO optimization Plus today you could have a good appropriate rank which may not really last in the coming 6 months. A several of the popular keyword study tools are Wordtracker, SEOMOZ Key word Difficulty Tool, SEOBook Keyword Device and Google Keyword Tool. Thankfully, SEO allows webmasters to offer clues that the engines may use to understand content. Since less as 20% dentists within a city hire SEO expert s who really wants that shift within their Google ranking. The particular analytical part of the SEARCH ENGINE OPTIMIZATION is about tracking organic key word positions, website traffic and the engagement in Google Analytics, Internet marketer Tools and many other specific tools. Mobile SEARCH ENGINE OPTIMIZATION is nothing than a typical SEO, creating content and marking to be able to endure out online. SEO rankings are placing excess fat than ever upon what users have to state. The Search System will help you to evaluate your keyword rankings, CTRs, achievable Google penalties and many additional useful data for technical SEARCH ENGINE OPTIMIZATION. Blog posts, guides, whitepapers, situation studies, videos, and social articles all need to include the particular right keywords for social plus SEO. For even more detailed information on the make use of of keywords on your internet site visit SEOcious to will discover many other important factors included in having your web web page in the top 10 entries on the search engines. SEARCH ENGINE OPTIMIZATION, search engine optimization is most about search engines, search motor result page (SERP), search position, online visibility, and quality visitors. If your internet site has about 5-10 niche key phrases that are extremely targeted yet not very competitive, your SEARCH ENGINE OPTIMIZATION pricing is going to end up being quite less.
0 notes
Text
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement
John Reed Stark
As I detailed in a post at the time (here), on Thursday last week, the SEC filed a securities fraud enforcement action against Tesla Chairman and CEO Elon Musk in connection with his now infamous tweets, in which he said he had “secured” funding to take the company private at a substantial premium over the company’s then-current share price. On Saturday, September 29, 2018, the SEC announced in a press release (here) that it had reached a settlement of the action with Musk, as well as in a separate action against Tesla filed simultaneously with the settlement. In the following guest post, John Reed Stark, the President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at the SEC’s enforcement actions and settlements with Musk and Tesla and provides his insight about what these developments may signify as far as the SEC’s enforcement posture regarding communications on the Internet. A version of this article originally appeared on the Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
****************************
The SEC complaint against Elon Musk and the settlement that followed seems like an obvious, routine and easy win for the government. But there is a lot more to the tweet debacle than meets the eye. The SEC complaint against Musk signals a new and aggressive era of SEC Enforcement and the Internet.
The Musk and Tesla SEC Lawsuits
The facts of the US Securities and Exchange Commission (SEC) lawsuit against Elon Musk, filed September 27, 2018, are fairly straightforward. On August 7th, 2018, Musk tweeted a nine-word message that he was “taking Tesla private at $420” and noted cryptically and confidently, “funding secured.” From the time of Musk’s first tweet that day until the close of trading, Tesla’s stock price increased by more than 6% on significantly increased volume and closed up 10.98% from the previous day – and also caused considerable market disruption.
The SEC quickly investigated, and concluded that Musk either knew, or was reckless in not knowing, that his tweet was false and misleading. The SEC then filed an SEC civil enforcement action, which is similarly straightforward in its allegations.
A few days after its filling, on September 29, 2018, Musk, without admitting or denying wrongdoing, settled to the SEC charges while simultaneously filing a new complaint this time against Tesla, which Tesla also settled without admitting or denying wrongdoing. The SEC complaint against Tesla alleges that: 1) Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC; and 2) Tesla did not have sufficient processes in place to ensure that Musk’s tweets were accurate or complete.
Among other relief, the Musk and Tesla settlements require that:
Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman.
Musk will be ineligible to be re-elected Chairman for three years;
Tesla will appoint a total of two new independent directors to its board;
Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications; and
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
But here’s the rub. The SEC does not typically file SEC enforcement actions like the one against Musk. Indeed, a close reading of the SEC’s complaint against the celebrated billionaire finds a litany of glaring absences within the SEC’s allegations, including:
No alleged profits or other ill-gotten gain earned by Musk;
No alleged scheme conducted by Musk;
No alleged market manipulation orchestrated by Musk;
No alleged pump and dump ploy executed by Musk;
No alleged conspiracy between Musk and anyone else;
No alleged evidence of scienter or intent by Musk;
No alleged false filing or other false or inaccurate Tesla report to the SEC by Musk;
No alleged violation of any sort of required SEC “quiet period” by Musk; and
No concrete evidence of any alleged motive attested to Musk (though not required in SEC enforcement actions, motive is typically pled or implied in some way, shape or form).
No doubt, Musk’s tweet was impetuous, impulsive, ill-advised, stupid, silly, unprofessional, childish, petty and the list goes on. Musk’s tweet also clearly had a material impact on Tesla securities and disrupted U.S. and even global financial markets.
But was this really a scheme by Musk to defraud investors? Or was it instead a juvenile missive from an exhausted entrepreneur whose ego and id had spun out of control, or perhaps a hapless attempt at transparency to inform his shareholders what, at that very moment, he was contemplating for their future. Perhaps the explanation is even simpler: Musk failed to think before he tweeted – and hit “post” during a momentary lapse in judgment between caffeine jolts and marijuana tokes on a bumpy car ride to the airport.
None of these possibilities seem to matter to the SEC and we will never know if any are true. Because whatever the truth or the facts, someone at Tesla decided that a $40 million SEC settlement might hopefully pale in comparison to Tesla stock’s multi-billion-dollar market cap recovery after the settlement’s announcement.
But putting all the machinations and drama of the “funding secured” fiasco aside, there is a much broader and emphatic SEC edict that now rings clear: Whenever a corporate executive makes a material false statement online — boom — it’s a securities fraud. Period. End of story.
The SEC Anti-Fraud Provisions
Section 10(b) (codified in 15 U.S.C. § 78j) is the SEC’s primary anti-fraud statutory provision. The SEC principally enforces this anti-fraud provision under Rule 10b-5, which specifically states:
Section 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
The SEC’s antifraud provisions are broad and sweeping – and are meant to be flexible to bend and adapt to new or evolving forms of investment fraud and chicanery. No matter the medium, the SEC’s anti-fraud statutory weaponry applies.
The SEC fraud charge against Musk relies solely on the paragraph of Section 10b-5 regarding false statements, which is not the typical centerpiece of an SEC fraud action. Specifically, the SEC Complaint charges:
The above SEC’s “Claim for Relief” may appear typical but it is far from the norm. An SEC fraud charge typically alleges evidence of more than merely a false statement – and adds conversations, testimony, emails, profit calculations and a broad range of other facts demonstrating a nefarious scheme.
Some Eerily Relevant SEC History
When considering the SEC Musk prosecution, two cases from almost 20 years ago are uncannily relevant: 1) the 1999 SEC case (and parallel DOJ criminal prosecution) against Gary Hoke; and 2) the 2000 SEC case (and parallel DOJ criminal prosecution) against Fred Moldofsky.
PairGain and Gary Hoke
The PaiGgain online hoax was perpetrated by 25-year old Californian Gary Hoke. The Hoke matter was followed by a string of similar online market manipulation impersonation hoaxes, many of which were successfully prosecuted by the SEC as well as, in some cases, the U.S. Department of Justice (DOJ), which seemed to stifle the new age fraud’s growth in its tracks.
Hoke worked for a company called PairGain, a California based telecommunications equipment manufacturer whose stock traded on the NASDAQ at the time. Hoke posted a message on an Internet message board falsely reporting that an Israeli company planned to acquire PairGain. The message board posting contained a link to a website designed by Hoke to mimic a Bloomberg online news report announcing the impending acquisition.
A snapshot of Hoke’s actual phony Bloomberg web page is as follows:
Hoke constructed the phony Bloomberg article website by using a fake name and an Internet service that offered users free websites. Hoke then linked to the fake website from messages about PairGain that he posted on Internet message boards about stocks (the early precursor to today’s social media platforms).
Hoke’s hoax (no pun intended) quickly inflated PairGain stock by more than 30%, from $8.50 per share to as high as $11.25. Trading that day totaled 13.7 million shares, about seven times PairGain stock’s average trading volume. The price of PairGain stock fell back to $9.38 when the company issued a statement denying that such a deal was in the works.
Hoke’s scheme was the first SEC and criminal prosecution that truly demonstrated how, in cyberspace, a single individual using just a single phony website and a few message board postings, could trick a large number of investors to trade. Hoke, apparently spooked by the publicity surrounding his scheme (which, given its ingenuity and novelty, made immediate headlines), opted not to add fuel to the fire and sell any of the 1,000 shares of PairGain stock he owned – despite opportunity for a quick and easy profit.
The SEC and DOJ identified Hoke as the bogus website’s creator by tracing certain website message board postings to his Internet service provider and Hoke was charged both by the SEC in a civil enforcement action and by the U.S. Attorney’s Office of the Central District of California (CDCA) in a criminal action. Bloomberg LP, parent company of Bloomberg news service, also filed a related lawsuit against Hoke in federal court in New York City, seeking unspecified damages for the scheme.
In the SEC enforcement action, just like Musk, Hoke was charged with violating the SEC’s antifraud provisions alleging
“Hoke knew or was reckless in not knowing that his statements . . . were materially false and misleading and, in addition, that posting those statements on a counterfeit Bloomberg page would materially mislead investors as to the reliability of that information . . . and would result in an increase in both the price and the volume of trading in PairGain securities.”
Hoke eventually settled with the SEC, and agreed, without admitting or denying wrongdoing, to an order barring him from future violations of federal anti-fraud laws.
In the criminal case, Hoke was charged with five counts of securities fraud and faced a maximum sentence of 10 years in prison and up to $1 million in fines per count, but he later pled guilty to two counts of securities fraud. At sentencing, U.S. District Judge Terry Hatter dismissed prosecutors’ recommendation of 12 to 13 months in prison, saying he was convinced Hoke’s decision to post the fraudulent story was an aberration in an otherwise honorable life. Judge Hatter sentenced Hoke to five months home detention, five years’ probation and ordered Hoke to pay $93,000 to about 30 investors who purchased PairGain stock and sold it at a loss after PairGain denied Hoke’s bogus report.
Interestingly, Judge Hatter also questioned whether the lack of Internet safeguards to prevent posting of false messages was partly to blame for the scam. Judge Hatter also criticized professional investors who failed to verify the fake report before buying PairGain stock, and said he was impressed by a letter in which Hoke’s mother said her son was “a victim” of the Internet.
“It doesn’t seem right that we proceed with this matter criminally when we don’t have protections out there,” Judge Hatter said.
Hoke told Judge Hatter that he posted the story to counter chat room messages that disparaged PairGain and the value of its stock. Hoke said he believed the messages were posted by traders who hoped to profit by driving down the price of the company’s shares. Hoke told reporters outside the courtroom:
“As a PairGain stockholder, it just made me unhappy. I felt I could influence the negative remarks people were making in a positive way. It was stupid.”
Sound familiar? Tesla short sellers have tortured Elon Musk for years. Musk and Hoke clearly felt the same pain.
Lucent and Fred Moldofsky
On the afternoon of March 22, 2000, Fred Moldofsky, a 46 year-old Canadian citizen living in Houston, posted on a message board rumors that Lucent would not meet its quarterly earnings estimates. Later, during that same evening, Moldofsky posted a fake PR Newswire announcement and several dozen other messages repeatedly stating that Lucent’s earnings were going to be poor. The postings were made March 22 and 23, 2000, under aliases such as “hot-like-wasabe” and “ya-gotta- believe-in-me.” Moldofsky apparently lifted language from an old Lucent press release to enhance his fake press release’s authenticity.
A snapshot of Moldofsky’s actual fake press release is as follows:
On March 22, 2000, Lucent’s stock closed at $62.63 a share, down $2.63. The next day, March 23rd, the stock opened at $62.13 and traded as low as $60.38. Market commentators attributed Lucent’s stock price decline to the press release that Moldofsky had disseminated. Lucent disavowed the information in the fake press release during the morning of March 23.
Moldofsky was caught within days of his false postings and charged by both the SEC and by the U.S. Attorney’s Office for the Southern District of New York (SDNY).
In the SEC action, without admitting or denying wrongdoing, Moldofsky agreed to a final SEC judgment permanently enjoining him from future securities violations. According to the SEC, Moldofsky did not have to pay a penalty based on his sworn inability to do so.
In the criminal action, Moldofsky was convicted by a jury of one count of securities fraud and was sentenced to the two months in prison he had already served. At the time of his sentencing, Moldofsky held a $30,000-a-year job at a Texas refinery, and could have received a six-year prison sentence. SDNY prosecutors argued that the fake press release, posted in March 2000, sent Lucent’s shares tumbling by 3.6 percent and harmed investors.
In handing down the sentence, U.S. District Judge Robert P. Patterson noted Moldofsky’s otherwise clean criminal record and the fact he did not profit from the bogus release. The judge imposed a $4,000 fine and also ordered Moldofsky to be confined to his home, when not working, for six months, though, admonishing Moldofsky at sentencing, stating:
“You can’t have people posting messages on the Internet willy-nilly.”
At sentencing, Moldofsky told the judge he did not realize he was breaking any law when he posted the fake release on Yahoo’s message board:
“I deeply regret what happened,” Moldofsky said. “There was never any intent to defraud investors.”
Sound familiar? Like Moldofsky, whatever Musk intended, he was not engaged in a scheme to defraud Tesla investors. And like the Judge in Moldofsky, the SEC is essentially telling corporate executives that the SEC will not permit them to post on Twitter “willy-nilly. “
Investors, Social Media, Disintermediation and Transparency
Hoke and Moldofsky were, of course, outsiders, and not corporate insiders like Musk. But there is a big difference between the conduct of small-time stock perps like Hoke and Moldofsky as compared to entrepreneurial visionary CEOs like Musk, though the charging statute used against Musk, Hoke and Moldofsky, Section 10b and Rule 10b-5, is exactly the same for all three of them.
Some may argue that Twitter and other social media are not suitable for important corporate disclosures. I get that — corporate disclosures must be fulsome and robust, and can carry onerous and critical duties to update and correct.
Others, like Judge Hatter in the Hoke case, may argue that the investors who bought Tesla stock after reading Musk’s “funding secured” tweet bear some of the blame for Musk’s predicament. Rather than basing their investment decisions on sound and thoughtful research; on consultations with professionals they trust; and on the wealth of data and analysis available online, they made a dangerous snap judgment with the same imprudent impulsiveness as Musk did. I get that too — investors should make investment decisions slowly, wisely, cautiously and carefully, not at the lightning speed of a tweet that has 280 characters or less.
But albeit well-intentioned, the SEC has sent a clear message to any corporate executive who wants to use social media to reach shareholders, analysts, media or anyone else – don’t do it. After all, how could any corporate communication ever be worth the risk of an SEC enforcement action or investigation – no matter how beneficial, insightful or important. This s a shame.
Social media could be a revolutionary tool for investors and should be embraced. Social media disintermediates communication lines between shareholders and executives, empowering corporate leaders to reach shareholders in ways never even imagined only a few years ago. Social media could democratize investing and enhance the vibrancy and efficiency of global capital markets. But there is little chance of any of this kind of progress after the Musk tweet SEC enforcement action.
Sadly, we may now be back to relying on routine SEC filings, such as10-K’s and 10-Q’s, which have become so replete with boiler-plate risk disclosures; maddening legalese; lengthy excess verbiage; and confusing gobbledygook, that they have been rendered almost meaningless for everyday investors. Ironically, the greatest value of EDGAR (the SEC’s online warehouse that stores corporate filings) is probably for plaintiffs’ lawyers, who scour the prehistoric database in search of potentially misleading, actionable and class-action worthy corporate statements.
Looking Ahead
There is not a securities lawyer on the face of the Earth that would have given Musk the go-ahead to post his now infamous August 7th tweet. Moreover, the phrase “funding secured,” will undoubtedly take on a life of its own in securities regulation lure, much like the notorious, “your bunny has a good nose,” whispered by Martin Siegel, confirming inside information to a co-conspirator in one of the many SEC/Giuliani-led insider trading prosecutions in the 1980s.
But that does not change the fact that in the SEC’s complaint against Musk, there are no allegations of any scheme, plot or plan by Musk. There are no allegations of any illicit profit, reprehensible chicanery or clandestine treachery by Musk. Musk is not even charged with any of the usual SEC lesser charges or more picayune securities violations.
To me, Musk’s story seems more about a petulant, careless, rash, exhausted and out-of-control founder with delusions of grandeur. A train-wreck – yes indeed. A subject of criticism and discipline by the Tesla Board – absolutely. A defendant in a lawsuit by disgruntled shareholders – maybe. But a scheming fraud artist charged with the same securities violation as Hoke and Moldofsky – no.
Musk’s tweet was abominable and inexcusable, but having said that, by charging Musk with fraud, the SEC may end up doing more harm than good. Thanks to Elon Musk and the SEC, we may have now entered a new era of SEC Internet enforcement, where corporate executives may never risk tweeting or otherwise posting any meaningful data or information on social media.
The SEC threw the book at Musk, including forcing Musk to pay a $20 million dollar penalty, a penalty that is exponentially greater than the penalties levied against Hoke ($93,000), Moldofsky ($4,000) and countless other more egregious SEC fraudsters.
And while the SEC succeeded in sending an important message about the need for truth, candor and accuracy of corporate communications uttered via every medium, the charges were not just overkill but were also perhaps a pyrrhic victory for investors as well. Indeed, when the dust settles, the SEC may not have scored a win for its precious investor constituency but instead, scored a win for its own self-preservation of the sacred remnants of Stone Age based securities regulation.
______________________________________
*John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He has taught most recently as Senior Lecturing Fellow at Duke University Law School Winter Sessions and will be teaching a cyber-law course at Duke Law in the Spring of 2019. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of, “The Cybersecurity Due Diligence Handbook.”
The post Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement appeared first on The D&O Diary.
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement published first on http://simonconsultancypage.tumblr.com/
0 notes
Text
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement
John Reed Stark
As I detailed in a post at the time (here), on Thursday last week, the SEC filed a securities fraud enforcement action against Tesla Chairman and CEO Elon Musk in connection with his now infamous tweets, in which he said he had “secured” funding to take the company private at a substantial premium over the company’s then-current share price. On Saturday, September 29, 2018, the SEC announced in a press release (here) that it had reached a settlement of the action with Musk, as well as in a separate action against Tesla filed simultaneously with the settlement. In the following guest post, John Reed Stark, the President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at the SEC’s enforcement actions and settlements with Musk and Tesla and provides his insight about what these developments may signify as far as the SEC’s enforcement posture regarding communications on the Internet. A version of this article originally appeared on the Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
****************************
The SEC complaint against Elon Musk and the settlement that followed seems like an obvious, routine and easy win for the government. But there is a lot more to the tweet debacle than meets the eye. The SEC complaint against Musk signals a new and aggressive era of SEC Enforcement and the Internet.
The Musk and Tesla SEC Lawsuits
The facts of the US Securities and Exchange Commission (SEC) lawsuit against Elon Musk, filed September 27, 2018, are fairly straightforward. On August 7th, 2018, Musk tweeted a nine-word message that he was “taking Tesla private at $420” and noted cryptically and confidently, “funding secured.” From the time of Musk’s first tweet that day until the close of trading, Tesla’s stock price increased by more than 6% on significantly increased volume and closed up 10.98% from the previous day – and also caused considerable market disruption.
The SEC quickly investigated, and concluded that Musk either knew, or was reckless in not knowing, that his tweet was false and misleading. The SEC then filed an SEC civil enforcement action, which is similarly straightforward in its allegations.
A few days after its filling, on September 29, 2018, Musk, without admitting or denying wrongdoing, settled to the SEC charges while simultaneously filing a new complaint this time against Tesla, which Tesla also settled without admitting or denying wrongdoing. The SEC complaint against Tesla alleges that: 1) Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC; and 2) Tesla did not have sufficient processes in place to ensure that Musk’s tweets were accurate or complete.
Among other relief, the Musk and Tesla settlements require that:
Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman.
Musk will be ineligible to be re-elected Chairman for three years;
Tesla will appoint a total of two new independent directors to its board;
Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications; and
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
But here’s the rub. The SEC does not typically file SEC enforcement actions like the one against Musk. Indeed, a close reading of the SEC’s complaint against the celebrated billionaire finds a litany of glaring absences within the SEC’s allegations, including:
No alleged profits or other ill-gotten gain earned by Musk;
No alleged scheme conducted by Musk;
No alleged market manipulation orchestrated by Musk;
No alleged pump and dump ploy executed by Musk;
No alleged conspiracy between Musk and anyone else;
No alleged evidence of scienter or intent by Musk;
No alleged false filing or other false or inaccurate Tesla report to the SEC by Musk;
No alleged violation of any sort of required SEC “quiet period” by Musk; and
No concrete evidence of any alleged motive attested to Musk (though not required in SEC enforcement actions, motive is typically pled or implied in some way, shape or form).
No doubt, Musk’s tweet was impetuous, impulsive, ill-advised, stupid, silly, unprofessional, childish, petty and the list goes on. Musk’s tweet also clearly had a material impact on Tesla securities and disrupted U.S. and even global financial markets.
But was this really a scheme by Musk to defraud investors? Or was it instead a juvenile missive from an exhausted entrepreneur whose ego and id had spun out of control, or perhaps a hapless attempt at transparency to inform his shareholders what, at that very moment, he was contemplating for their future. Perhaps the explanation is even simpler: Musk failed to think before he tweeted – and hit “post” during a momentary lapse in judgment between caffeine jolts and marijuana tokes on a bumpy car ride to the airport.
None of these possibilities seem to matter to the SEC and we will never know if any are true. Because whatever the truth or the facts, someone at Tesla decided that a $40 million SEC settlement might hopefully pale in comparison to Tesla stock’s multi-billion-dollar market cap recovery after the settlement’s announcement.
But putting all the machinations and drama of the “funding secured” fiasco aside, there is a much broader and emphatic SEC edit that now rings clear: Whenever a corporate executive makes a material false statement online — boom — it’s a securities fraud. Period. End of story.
The SEC Anti-Fraud Provisions
Section 10(b) (codified in 15 U.S.C. § 78j) is the SEC’s primary anti-fraud statutory provision. The SEC principally enforces this anti-fraud provision under Rule 10b-5, which specifically states:
Section 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
The SEC’s antifraud provisions are broad and sweeping – and are meant to be flexible to bend and adapt to new or evolving forms of investment fraud and chicanery. No matter the medium, the SEC’s anti-fraud statutory weaponry applies.
The SEC fraud charge against Musk relies solely on the paragraph of Section 10b-5 regarding false statements, which is not the typical centerpiece of an SEC fraud action. Specifically, the SEC Complaint charges:
The above SEC’s “Claim for Relief” may appear typical but it is far from the norm. An SEC fraud charge typically alleges evidence of more than merely a false statement – and adds conversations, testimony, emails, profit calculations and a broad range of other facts demonstrating a nefarious scheme.
Some Eerily Relevant SEC History
When considering the SEC Musk prosecution, two cases from almost 20 years ago are uncannily relevant: 1) the 1999 SEC case (and parallel DOJ criminal prosecution) against Gary Hoke; and 2) the 2000 SEC case (and parallel DOJ criminal prosecution) against Fred Moldofsky.
PairGain and Gary Hoke
The PaiGgain online hoax was perpetrated by 25-year old Californian Gary Hoke. The Hoke matter was followed by a string of similar online market manipulation impersonation hoaxes, many of which were successfully prosecuted by the SEC as well as, in some cases, the U.S. Department of Justice (DOJ), which seemed to stifle the new age fraud’s growth in its tracks.
Hoke worked for a company called PairGain, a California based telecommunications equipment manufacturer whose stock traded on the NASDAQ at the time. Hoke posted a message on an Internet message board falsely reporting that an Israeli company planned to acquire PairGain. The message board posting contained a link to a website designed by Hoke to mimic a Bloomberg online news report announcing the impending acquisition.
A snapshot of Hoke’s actual phony Bloomberg web page is as follows:
Hoke constructed the phony Bloomberg article website by using a fake name and an Internet service that offered users free websites. Hoke then linked to the fake website from messages about PairGain that he posted on Internet message boards about stocks (the early precursor to today’s social media platforms).
Hoke’s hoax (no pun intended) quickly inflated PairGain stock by more than 30%, from $8.50 per share to as high as $11.25. Trading that day totaled 13.7 million shares, about seven times PairGain stock’s average trading volume. The price of PairGain stock fell back to $9.38 when the company issued a statement denying that such a deal was in the works.
Hoke’s scheme was the first SEC and criminal prosecution that truly demonstrated how, in cyberspace, a single individual using just a single phony website and a few message board postings, could trick a large number of investors to trade. Hoke, apparently spooked by the publicity surrounding his scheme (which, given its ingenuity and novelty, made immediate headlines), opted not to add fuel to the fire and sell any of the 1,000 shares of PairGain stock he owned – despite opportunity for a quick and easy profit.
The SEC and DOJ identified Hoke as the bogus website’s creator by tracing certain website message board postings to his Internet service provider and Hoke was charged both by the SEC in a civil enforcement action and by the U.S. Attorney’s Office of the Central District of California (CDCA) in a criminal action. Bloomberg LP, parent company of Bloomberg news service, also filed a related lawsuit against Hoke in federal court in New York City, seeking unspecified damages for the scheme.
In the SEC enforcement action, just like Musk, Hoke was charged with violating the SEC’s antifraud provisions alleging
“Hoke knew or was reckless in not knowing that his statements . . . were materially false and misleading and, in addition, that posting those statements on a counterfeit Bloomberg page would materially mislead investors as to the reliability of that information . . . and would result in an increase in both the price and the volume of trading in PairGain securities.”
Hoke eventually settled with the SEC, and agreed, without admitting or denying wrongdoing, to an order barring him from future violations of federal anti-fraud laws.
In the criminal case, Hoke was charged with five counts of securities fraud and faced a maximum sentence of 10 years in prison and up to $1 million in fines per count, but he later pled guilty to two counts of securities fraud. At sentencing, U.S. District Judge Terry Hatter dismissed prosecutors’ recommendation of 12 to 13 months in prison, saying he was convinced Hoke’s decision to post the fraudulent story was an aberration in an otherwise honorable life. Judge Hatter sentenced Hoke to five months home detention, five years’ probation and ordered Hoke to pay $93,000 to about 30 investors who purchased PairGain stock and sold it at a loss after PairGain denied Hoke’s bogus report.
Interestingly, Judge Hatter also questioned whether the lack of Internet safeguards to prevent posting of false messages was partly to blame for the scam. Judge Hatter also criticized professional investors who failed to verify the fake report before buying PairGain stock, and said he was impressed by a letter in which Hoke’s mother said her son was “a victim” of the Internet.
“It doesn’t seem right that we proceed with this matter criminally when we don’t have protections out there,” Judge Hatter said.
Hoke told Judge Hatter that he posted the story to counter chat room messages that disparaged PairGain and the value of its stock. Hoke said he believed the messages were posted by traders who hoped to profit by driving down the price of the company’s shares. Hoke told reporters outside the courtroom:
“As a PairGain stockholder, it just made me unhappy. I felt I could influence the negative remarks people were making in a positive way. It was stupid.”
Sound familiar? Tesla short sellers have tortured Elon Musk for years. Musk and Hoke clearly felt the same pain.
Lucent and Fred Moldofsky
On the afternoon of March 22, 2000, Fred Moldofsky, a 46 year-old Canadian citizen living in Houston, posted on a message board rumors that Lucent would not meet its quarterly earnings estimates. Later, during that same evening, Moldofsky posted a fake PR Newswire announcement and several dozen other messages repeatedly stating that Lucent’s earnings were going to be poor. The postings were made March 22 and 23, 2000, under aliases such as “hot-like-wasabe” and “ya-gotta- believe-in-me.” Moldofsky apparently lifted language from an old Lucent press release to enhance his fake press release’s authenticity.
A snapshot of Moldofsky’s actual fake press release is as follows:
On March 22, 2000, Lucent’s stock closed at $62.63 a share, down $2.63. The next day, March 23rd, the stock opened at $62.13 and traded as low as $60.38. Market commentators attributed Lucent’s stock price decline to the press release that Moldofsky had disseminated. Lucent disavowed the information in the fake press release during the morning of March 23.
Moldofsky was caught within days of his false postings and charged by both the SEC and by the U.S. Attorney’s Office for the Southern District of New York (SDNY).
In the SEC action, without admitting or denying wrongdoing, Moldofsky agreed to a final SEC judgment permanently enjoining him from future securities violations. According to the SEC, Moldofsky did not have to pay a penalty based on his sworn inability to do so.
In the criminal action, Moldofsky was convicted by a jury of one count of securities fraud and was sentenced to the two months in prison he had already served. At the time of his sentencing, Moldofsky held a $30,000-a-year job at a Texas refinery, and could have received a six-year prison sentence. SDNY prosecutors argued that the fake press release, posted in March 2000, sent Lucent’s shares tumbling by 3.6 percent and harmed investors.
In handing down the sentence, U.S. District Judge Robert P. Patterson noted Moldofsky’s otherwise clean criminal record and the fact he did not profit from the bogus release. The judge imposed a $4,000 fine and also ordered Moldofsky to be confined to his home, when not working, for six months, though, admonishing Moldofsky at sentencing, stating:
“You can’t have people posting messages on the Internet willy-nilly.”
At sentencing, Moldofsky told the judge he did not realize he was breaking any law when he posted the fake release on Yahoo’s message board:
“I deeply regret what happened,” Moldofsky said. “There was never any intent to defraud investors.”
Sound familiar? Like Moldofsky, whatever Musk intended, he was not engaged in a scheme to defraud Tesla investors. And like the Judge in Moldofsky, the SEC is essentially telling corporate executives that the SEC will not permit them to post on Twitter “willy-nilly. “
Investors, Social Media, Disintermediation and Transparency
Hoke and Moldofsky were, of course, outsiders, and not corporate insiders like Musk. But there is a big difference between the conduct of small-time stock perps like Hoke and Moldofsky as compared to entrepreneurial visionary CEOs like Musk, though the charging statute used against Musk, Hoke and Moldofsky, Section 10b and Rule 10b-5, is exactly the same for all three of them.
Some may argue that Twitter and other social media are not suitable for important corporate disclosures. I get that — corporate disclosures must be fulsome and robust, and can carry onerous and critical duties to update and correct.
Others, like Judge Hatter in the Hoke case, may argue that the investors who bought Tesla stock after reading Musk’s “funding secured” tweet bear some of the blame for Musk’s predicament. Rather than basing their investment decisions on sound and thoughtful research; on consultations with professionals they trust; and on the wealth of data and analysis available online, they made a dangerous snap judgment with the same imprudent impulsiveness as Musk did. I get that too — investors should make investment decisions slowly, wisely, cautiously and carefully, not at the lightning speed of a tweet that has 280 characters or less.
But albeit well-intentioned, the SEC has sent a clear message to any corporate executive who wants to use social media to reach shareholders, analysts, media or anyone else – don’t do it. After all, how could any corporate communication ever be worth the risk of an SEC enforcement action or investigation – no matter how beneficial, insightful or important. This s a shame.
Social media could be a revolutionary tool for investors and should be embraced. Social media disintermediates communication lines between shareholders and executives, empowering corporate leaders to reach shareholders in ways never even imagined only a few years ago. Social media could democratize investing and enhance the vibrancy and efficiency of global capital markets. But there is little chance of any of this kind of progress after the Musk tweet SEC enforcement action.
Sadly, we may now be back to relying on routine SEC filings, such as10-K’s and 10-Q’s, which have become so replete with boiler-plate risk disclosures; maddening legalese; lengthy excess verbiage; and confusing gobbledygook, that they have been rendered almost meaningless for everyday investors. Ironically, the greatest value of EDGAR (the SEC’s online warehouse that stores corporate filings) is probably for plaintiffs’ lawyers, who scour the prehistoric database in search of potentially misleading, actionable and class-action worthy corporate statements.
Looking Ahead
There is not a securities lawyer on the face of the Earth that would have given Musk the go-ahead to post his now infamous August 7th tweet. Moreover, the phrase “funding secured,” will undoubtedly take on a life of its own in securities regulation lure, much like the notorious, “your bunny has a good nose,” whispered by Martin Siegel, confirming inside information to a co-conspirator in one of the many SEC/Giuliani-led insider trading prosecutions in the 1980s.
But that does not change the fact that in the SEC’s complaint against Musk, there are no allegations of any scheme, plot or plan by Musk. There are no allegations of any illicit profit, reprehensible chicanery or clandestine treachery by Musk. Musk is not even charged with any of the usual SEC lesser charges or more picayune securities violations.
To me, Musk’s story seems more about a petulant, careless, rash, exhausted and out-of-control founder with delusions of grandeur. A train-wreck – yes indeed. A subject of criticism and discipline by the Tesla Board – absolutely. A defendant in a lawsuit by disgruntled shareholders – maybe. But a scheming fraud artist charged with the same securities violation as Hoke and Moldofsky – no.
Musk’s tweet was abominable and inexcusable, but having said that, by charging Musk with fraud, the SEC may end up doing more harm than good. Thanks to Elon Musk and the SEC, we may have now entered a new era of SEC Internet enforcement, where corporate executives may never risk tweeting or otherwise posting any meaningful data or information on social media.
The SEC threw the book at Musk, including forcing Musk to pay a $20 million dollar penalty, a penalty that is exponentially greater than the penalties levied against Hoke ($93,000), Moldofsky ($4,000) and countless other more egregious SEC fraudsters.
And while the SEC succeeded in sending an important message about the need for truth, candor and accuracy of corporate communications uttered via every medium, the charges were not just overkill but were also perhaps a pyrrhic victory for investors as well. Indeed, when the dust settles, the SEC may not have scored a win for its precious investor constituency but instead, scored a win for its own self-preservation of the sacred remnants of Stone Age based securities regulation.
______________________________________
*John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He has taught most recently as Senior Lecturing Fellow at Duke University Law School Winter Sessions and will be teaching a cyber-law course at Duke Law in the Spring of 2019. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of, “The Cybersecurity Due Diligence Handbook.”
The post Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement appeared first on The D&O Diary.
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement syndicated from https://ronenkurzfeldweb.wordpress.com/
0 notes
Text
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement
John Reed Stark
As I detailed in a post at the time (here), on Thursday last week, the SEC filed a securities fraud enforcement action against Tesla Chairman and CEO Elon Musk in connection with his now infamous tweets, in which he said he had “secured” funding to take the company private at a substantial premium over the company’s then-current share price. On Saturday, September 29, 2018, the SEC announced in a press release (here) that it had reached a settlement of the action with Musk, as well as in a separate action against Tesla filed simultaneously with the settlement. In the following guest post, John Reed Stark, the President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at the SEC’s enforcement actions and settlements with Musk and Tesla and provides his insight about what these developments may signify as far as the SEC’s enforcement posture regarding communications on the Internet. A version of this article originally appeared on the Securities Docket. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.
****************************
The SEC complaint against Elon Musk and the settlement that followed seems like an obvious, routine and easy win for the government. But there is a lot more to the tweet debacle than meets the eye. The SEC complaint against Musk signals a new and aggressive era of SEC Enforcement and the Internet.
The Musk and Tesla SEC Lawsuits
The facts of the US Securities and Exchange Commission (SEC) lawsuit against Elon Musk, filed September 27, 2018, are fairly straightforward. On August 7th, 2018, Musk tweeted a nine-word message that he was “taking Tesla private at $420” and noted cryptically and confidently, “funding secured.” From the time of Musk’s first tweet that day until the close of trading, Tesla’s stock price increased by more than 6% on significantly increased volume and closed up 10.98% from the previous day – and also caused considerable market disruption.
The SEC quickly investigated, and concluded that Musk either knew, or was reckless in not knowing, that his tweet was false and misleading. The SEC then filed an SEC civil enforcement action, which is similarly straightforward in its allegations.
A few days after its filling, on September 29, 2018, Musk, without admitting or denying wrongdoing, settled to the SEC charges while simultaneously filing a new complaint this time against Tesla, which Tesla also settled without admitting or denying wrongdoing. The SEC complaint against Tesla alleges that: 1) Tesla had no disclosure controls or procedures in place to determine whether Musk’s tweets contained information required to be disclosed in Tesla’s SEC; and 2) Tesla did not have sufficient processes in place to ensure that Musk’s tweets were accurate or complete.
Among other relief, the Musk and Tesla settlements require that:
Musk will step down as Tesla’s Chairman and be replaced by an independent Chairman.
Musk will be ineligible to be re-elected Chairman for three years;
Tesla will appoint a total of two new independent directors to its board;
Tesla will establish a new committee of independent directors and put in place additional controls and procedures to oversee Musk’s communications; and
Musk and Tesla will each pay a separate $20 million penalty. The $40 million in penalties will be distributed to harmed investors under a court-approved process.
But here’s the rub. The SEC does not typically file SEC enforcement actions like the one against Musk. Indeed, a close reading of the SEC’s complaint against the celebrated billionaire finds a litany of glaring absences within the SEC’s allegations, including:
No alleged profits or other ill-gotten gain earned by Musk;
No alleged scheme conducted by Musk;
No alleged market manipulation orchestrated by Musk;
No alleged pump and dump ploy executed by Musk;
No alleged conspiracy between Musk and anyone else;
No alleged evidence of scienter or intent by Musk;
No alleged false filing or other false or inaccurate Tesla report to the SEC by Musk;
No alleged violation of any sort of required SEC “quiet period” by Musk; and
No concrete evidence of any alleged motive attested to Musk (though not required in SEC enforcement actions, motive is typically pled or implied in some way, shape or form).
No doubt, Musk’s tweet was impetuous, impulsive, ill-advised, stupid, silly, unprofessional, childish, petty and the list goes on. Musk’s tweet also clearly had a material impact on Tesla securities and disrupted U.S. and even global financial markets.
But was this really a scheme by Musk to defraud investors? Or was it instead a juvenile missive from an exhausted entrepreneur whose ego and id had spun out of control, or perhaps a hapless attempt at transparency to inform his shareholders what, at that very moment, he was contemplating for their future. Perhaps the explanation is even simpler: Musk failed to think before he tweeted – and hit “post” during a momentary lapse in judgment between caffeine jolts and marijuana tokes on a bumpy car ride to the airport.
None of these possibilities seem to matter to the SEC and we will never know if any are true. Because whatever the truth or the facts, someone at Tesla decided that a $40 million SEC settlement might hopefully pale in comparison to Tesla stock’s multi-billion-dollar market cap recovery after the settlement’s announcement.
But putting all the machinations and drama of the “funding secured” fiasco aside, there is a much broader and emphatic SEC edit that now rings clear: Whenever a corporate executive makes a material false statement online — boom — it’s a securities fraud. Period. End of story.
The SEC Anti-Fraud Provisions
Section 10(b) (codified in 15 U.S.C. § 78j) is the SEC’s primary anti-fraud statutory provision. The SEC principally enforces this anti-fraud provision under Rule 10b-5, which specifically states:
Section 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
The SEC’s antifraud provisions are broad and sweeping – and are meant to be flexible to bend and adapt to new or evolving forms of investment fraud and chicanery. No matter the medium, the SEC’s anti-fraud statutory weaponry applies.
The SEC fraud charge against Musk relies solely on the paragraph of Section 10b-5 regarding false statements, which is not the typical centerpiece of an SEC fraud action. Specifically, the SEC Complaint charges:
The above SEC’s “Claim for Relief” may appear typical but it is far from the norm. An SEC fraud charge typically alleges evidence of more than merely a false statement – and adds conversations, testimony, emails, profit calculations and a broad range of other facts demonstrating a nefarious scheme.
Some Eerily Relevant SEC History
When considering the SEC Musk prosecution, two cases from almost 20 years ago are uncannily relevant: 1) the 1999 SEC case (and parallel DOJ criminal prosecution) against Gary Hoke; and 2) the 2000 SEC case (and parallel DOJ criminal prosecution) against Fred Moldofsky.
PairGain and Gary Hoke
The PaiGgain online hoax was perpetrated by 25-year old Californian Gary Hoke. The Hoke matter was followed by a string of similar online market manipulation impersonation hoaxes, many of which were successfully prosecuted by the SEC as well as, in some cases, the U.S. Department of Justice (DOJ), which seemed to stifle the new age fraud’s growth in its tracks.
Hoke worked for a company called PairGain, a California based telecommunications equipment manufacturer whose stock traded on the NASDAQ at the time. Hoke posted a message on an Internet message board falsely reporting that an Israeli company planned to acquire PairGain. The message board posting contained a link to a website designed by Hoke to mimic a Bloomberg online news report announcing the impending acquisition.
A snapshot of Hoke’s actual phony Bloomberg web page is as follows:
Hoke constructed the phony Bloomberg article website by using a fake name and an Internet service that offered users free websites. Hoke then linked to the fake website from messages about PairGain that he posted on Internet message boards about stocks (the early precursor to today’s social media platforms).
Hoke’s hoax (no pun intended) quickly inflated PairGain stock by more than 30%, from $8.50 per share to as high as $11.25. Trading that day totaled 13.7 million shares, about seven times PairGain stock’s average trading volume. The price of PairGain stock fell back to $9.38 when the company issued a statement denying that such a deal was in the works.
Hoke’s scheme was the first SEC and criminal prosecution that truly demonstrated how, in cyberspace, a single individual using just a single phony website and a few message board postings, could trick a large number of investors to trade. Hoke, apparently spooked by the publicity surrounding his scheme (which, given its ingenuity and novelty, made immediate headlines), opted not to add fuel to the fire and sell any of the 1,000 shares of PairGain stock he owned – despite opportunity for a quick and easy profit.
The SEC and DOJ identified Hoke as the bogus website’s creator by tracing certain website message board postings to his Internet service provider and Hoke was charged both by the SEC in a civil enforcement action and by the U.S. Attorney’s Office of the Central District of California (CDCA) in a criminal action. Bloomberg LP, parent company of Bloomberg news service, also filed a related lawsuit against Hoke in federal court in New York City, seeking unspecified damages for the scheme.
In the SEC enforcement action, just like Musk, Hoke was charged with violating the SEC’s antifraud provisions alleging
“Hoke knew or was reckless in not knowing that his statements . . . were materially false and misleading and, in addition, that posting those statements on a counterfeit Bloomberg page would materially mislead investors as to the reliability of that information . . . and would result in an increase in both the price and the volume of trading in PairGain securities.”
Hoke eventually settled with the SEC, and agreed, without admitting or denying wrongdoing, to an order barring him from future violations of federal anti-fraud laws.
In the criminal case, Hoke was charged with five counts of securities fraud and faced a maximum sentence of 10 years in prison and up to $1 million in fines per count, but he later pled guilty to two counts of securities fraud. At sentencing, U.S. District Judge Terry Hatter dismissed prosecutors’ recommendation of 12 to 13 months in prison, saying he was convinced Hoke’s decision to post the fraudulent story was an aberration in an otherwise honorable life. Judge Hatter sentenced Hoke to five months home detention, five years’ probation and ordered Hoke to pay $93,000 to about 30 investors who purchased PairGain stock and sold it at a loss after PairGain denied Hoke’s bogus report.
Interestingly, Judge Hatter also questioned whether the lack of Internet safeguards to prevent posting of false messages was partly to blame for the scam. Judge Hatter also criticized professional investors who failed to verify the fake report before buying PairGain stock, and said he was impressed by a letter in which Hoke’s mother said her son was “a victim” of the Internet.
“It doesn’t seem right that we proceed with this matter criminally when we don’t have protections out there,” Judge Hatter said.
Hoke told Judge Hatter that he posted the story to counter chat room messages that disparaged PairGain and the value of its stock. Hoke said he believed the messages were posted by traders who hoped to profit by driving down the price of the company’s shares. Hoke told reporters outside the courtroom:
“As a PairGain stockholder, it just made me unhappy. I felt I could influence the negative remarks people were making in a positive way. It was stupid.”
Sound familiar? Tesla short sellers have tortured Elon Musk for years. Musk and Hoke clearly felt the same pain.
Lucent and Fred Moldofsky
On the afternoon of March 22, 2000, Fred Moldofsky, a 46 year-old Canadian citizen living in Houston, posted on a message board rumors that Lucent would not meet its quarterly earnings estimates. Later, during that same evening, Moldofsky posted a fake PR Newswire announcement and several dozen other messages repeatedly stating that Lucent’s earnings were going to be poor. The postings were made March 22 and 23, 2000, under aliases such as “hot-like-wasabe” and “ya-gotta- believe-in-me.” Moldofsky apparently lifted language from an old Lucent press release to enhance his fake press release’s authenticity.
A snapshot of Moldofsky’s actual fake press release is as follows:
On March 22, 2000, Lucent’s stock closed at $62.63 a share, down $2.63. The next day, March 23rd, the stock opened at $62.13 and traded as low as $60.38. Market commentators attributed Lucent’s stock price decline to the press release that Moldofsky had disseminated. Lucent disavowed the information in the fake press release during the morning of March 23.
Moldofsky was caught within days of his false postings and charged by both the SEC and by the U.S. Attorney’s Office for the Southern District of New York (SDNY).
In the SEC action, without admitting or denying wrongdoing, Moldofsky agreed to a final SEC judgment permanently enjoining him from future securities violations. According to the SEC, Moldofsky did not have to pay a penalty based on his sworn inability to do so.
In the criminal action, Moldofsky was convicted by a jury of one count of securities fraud and was sentenced to the two months in prison he had already served. At the time of his sentencing, Moldofsky held a $30,000-a-year job at a Texas refinery, and could have received a six-year prison sentence. SDNY prosecutors argued that the fake press release, posted in March 2000, sent Lucent’s shares tumbling by 3.6 percent and harmed investors.
In handing down the sentence, U.S. District Judge Robert P. Patterson noted Moldofsky’s otherwise clean criminal record and the fact he did not profit from the bogus release. The judge imposed a $4,000 fine and also ordered Moldofsky to be confined to his home, when not working, for six months, though, admonishing Moldofsky at sentencing, stating:
“You can’t have people posting messages on the Internet willy-nilly.”
At sentencing, Moldofsky told the judge he did not realize he was breaking any law when he posted the fake release on Yahoo’s message board:
“I deeply regret what happened,” Moldofsky said. “There was never any intent to defraud investors.”
Sound familiar? Like Moldofsky, whatever Musk intended, he was not engaged in a scheme to defraud Tesla investors. And like the Judge in Moldofsky, the SEC is essentially telling corporate executives that the SEC will not permit them to post on Twitter “willy-nilly. “
Investors, Social Media, Disintermediation and Transparency
Hoke and Moldofsky were, of course, outsiders, and not corporate insiders like Musk. But there is a big difference between the conduct of small-time stock perps like Hoke and Moldofsky as compared to entrepreneurial visionary CEOs like Musk, though the charging statute used against Musk, Hoke and Moldofsky, Section 10b and Rule 10b-5, is exactly the same for all three of them.
Some may argue that Twitter and other social media are not suitable for important corporate disclosures. I get that — corporate disclosures must be fulsome and robust, and can carry onerous and critical duties to update and correct.
Others, like Judge Hatter in the Hoke case, may argue that the investors who bought Tesla stock after reading Musk’s “funding secured” tweet bear some of the blame for Musk’s predicament. Rather than basing their investment decisions on sound and thoughtful research; on consultations with professionals they trust; and on the wealth of data and analysis available online, they made a dangerous snap judgment with the same imprudent impulsiveness as Musk did. I get that too — investors should make investment decisions slowly, wisely, cautiously and carefully, not at the lightning speed of a tweet that has 280 characters or less.
But albeit well-intentioned, the SEC has sent a clear message to any corporate executive who wants to use social media to reach shareholders, analysts, media or anyone else – don’t do it. After all, how could any corporate communication ever be worth the risk of an SEC enforcement action or investigation – no matter how beneficial, insightful or important. This s a shame.
Social media could be a revolutionary tool for investors and should be embraced. Social media disintermediates communication lines between shareholders and executives, empowering corporate leaders to reach shareholders in ways never even imagined only a few years ago. Social media could democratize investing and enhance the vibrancy and efficiency of global capital markets. But there is little chance of any of this kind of progress after the Musk tweet SEC enforcement action.
Sadly, we may now be back to relying on routine SEC filings, such as10-K’s and 10-Q’s, which have become so replete with boiler-plate risk disclosures; maddening legalese; lengthy excess verbiage; and confusing gobbledygook, that they have been rendered almost meaningless for everyday investors. Ironically, the greatest value of EDGAR (the SEC’s online warehouse that stores corporate filings) is probably for plaintiffs’ lawyers, who scour the prehistoric database in search of potentially misleading, actionable and class-action worthy corporate statements.
Looking Ahead
There is not a securities lawyer on the face of the Earth that would have given Musk the go-ahead to post his now infamous August 7th tweet. Moreover, the phrase “funding secured,” will undoubtedly take on a life of its own in securities regulation lure, much like the notorious, “your bunny has a good nose,” whispered by Martin Siegel, confirming inside information to a co-conspirator in one of the many SEC/Giuliani-led insider trading prosecutions in the 1980s.
But that does not change the fact that in the SEC’s complaint against Musk, there are no allegations of any scheme, plot or plan by Musk. There are no allegations of any illicit profit, reprehensible chicanery or clandestine treachery by Musk. Musk is not even charged with any of the usual SEC lesser charges or more picayune securities violations.
To me, Musk’s story seems more about a petulant, careless, rash, exhausted and out-of-control founder with delusions of grandeur. A train-wreck – yes indeed. A subject of criticism and discipline by the Tesla Board – absolutely. A defendant in a lawsuit by disgruntled shareholders – maybe. But a scheming fraud artist charged with the same securities violation as Hoke and Moldofsky – no.
Musk’s tweet was abominable and inexcusable, but having said that, by charging Musk with fraud, the SEC may end up doing more harm than good. Thanks to Elon Musk and the SEC, we may have now entered a new era of SEC Internet enforcement, where corporate executives may never risk tweeting or otherwise posting any meaningful data or information on social media.
The SEC threw the book at Musk, including forcing Musk to pay a $20 million dollar penalty, a penalty that is exponentially greater than the penalties levied against Hoke ($93,000), Moldofsky ($4,000) and countless other more egregious SEC fraudsters.
And while the SEC succeeded in sending an important message about the need for truth, candor and accuracy of corporate communications uttered via every medium, the charges were not just overkill but were also perhaps a pyrrhic victory for investors as well. Indeed, when the dust settles, the SEC may not have scored a win for its precious investor constituency but instead, scored a win for its own self-preservation of the sacred remnants of Stone Age based securities regulation.
______________________________________
*John Reed Stark is president of John Reed Stark Consulting LLC, a data breach response and digital compliance firm. Formerly, Mr. Stark served for almost 20 years in the Enforcement Division of the U.S. Securities and Exchange Commission, the last 11 of which as Chief of its Office of Internet Enforcement. He has taught most recently as Senior Lecturing Fellow at Duke University Law School Winter Sessions and will be teaching a cyber-law course at Duke Law in the Spring of 2019. Mr. Stark also worked for 15 years as an Adjunct Professor of Law at the Georgetown University Law Center, where he taught several courses on the juxtaposition of law, technology and crime, and for five years as managing director of global data breach response firm, Stroz Friedberg, including three years heading its Washington, D.C. office. Mr. Stark is the author of, “The Cybersecurity Due Diligence Handbook.”
The post Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement appeared first on The D&O Diary.
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement published first on http://simonconsultancypage.tumblr.com/
0 notes