October 17, 2018
The current standard of allowing (certain) companies to make forward-looking statements and materially misleading statements via Twitter makes it difficult if not impossible to stay up to date with that companies material events. In almost every case where it would be required, there are no disclosures/boilerplates. The argument that this is "modernization" comes at the expense of full disclosure, something I dare say would go against the heart of why standard disclosure practices were put in place and why the SEC was formed in the first place.
The disclosure system was meant to level the playing field and allow one source for tracking material information about a company - the lack of enforcement is extremely troubling.
It is on Investor.gov we see the SEC's mandates, including, in my opinion, the most important one:
"Companies offering securities for sale to the public must tell the truth about their business, the securities they are selling, and the risks involved in investing in those securities."
It is important to note there is no mandate to maintain a stock price of a single equity, and there is a reason: allowing a bad actor to continue their actions harms the entire equity market by reducing investor confidence in the validity of the entire market. When regulators take the position that enforcement action would harm shareholders they have effectively become enablers, if not co-conspirators, in the fraud. Worse yet, if the penalties for such actions are so light that they do not even dissuade the bad actors from continuing than all it does is codify the costs of doing business. A line item in fraud.
I hope that the SEC can continue to make markets a safer place for main street investors, but I am concerned that recent regulatory actions have done nothing to bolster its image as a regulator that should be respected. The most dangerous scenario for an investor is one where the rules of the road are allowed to be broken at will by some actors - Caveat Emptor is superior to partial enforcement - please ensure everyone follows the rules.