Carl Icahn Proves It – The SEC Got Social Media Disclosures Wrong

Carl Icahn’s partnership, Icahn Enterprises L.P. Carl Icahn, owns a big stake in Apple.  On Tuesday Apple stock went up more than 4%.  What’s the connection?  During the trading day Mr. Icahn Tweeted this:

Icahn Tweet

Apple CEO Tim Cook apparently discussed this with Mr. Icahn.  Apple issued the following statement:

“We appreciate the interest and investment of all our shareholders. Tim had a very positive conversation with Mr. Icahn today.”

We discussed this here at Big Data and the Law in the past.  The SEC has required insiders to give notice of the social media outlets where they might disclose material information. 

In this case, Mr. Icahn did just that.  Here’s the press release:

August 12, 2013

Icahn Enterprises L.P. Issues Statement Regarding Twitter Account of Chairman Carl C. Icahn

NEW YORK, Aug. 12, 2013 (GLOBE NEWSWIRE) — Icahn Enterprises L.P. (Nasdaq:IEP) today issued the following statement:

On April 2, 2013, the Securities and Exchange Commission (“SEC”) issued a report in which it provided guidance to issuers regarding the use of social media to disclose material non−public information. Our Chairman, Carl C. Icahn, intends to use Twitter from time to time to communicate with the public about our company and other issues. Mr. Icahn’s Twitter handle is @Carl_C_Icahn. It is possible that the information that Mr. Icahn posts on Twitter (which may include information regarding companies in which we and/or Mr. Icahn have or may be contemplating an investment position) could be deemed to be material information. Therefore, in light of the SEC’s guidance, we encourage investors, the media, and others interested in our company to review the information that Mr. Icahn posts on Twitter in addition to the information that we disclose using our investor relations website (, SEC filings, press releases, public conference calls and webcasts.

Icahn Enterprises L.P. (Nasdaq:IEP), a master limited partnership, is a diversified holding company engaged in nine primary business segments: Investment, Automotive, Energy, Metals, Railcar, Gaming, Food Packaging, Real Estate and Home Fashion.

That’s great.  But here’s the thing.  Notice that the press release was issued one day before Mr. Icahn’s Tweet.  One day.

As you know, we here at Big Data and the Law think the SEC should never have permitted this nonsense.  However, even if even we thought it was acceptable, there should be some minimum time between giving notice you’re going to make disclosures through social media and actually doing it.  Moreover, these public disclosures should not come in the middle of a trading day.  I realize that, as an individual, I don’t have a chance to win in the markets (except by chance), but can we at least pretend the markets are fair?

Think about it.  In order to timely react to the Icahn-Apple Tweet I would have to (a) have noticed the Icahn press release (which seems unlikely, given that I don’t invest in his billionaire buddy limited partnership – remember the press release itself was not about Apple), (b) promptly established a Twitter account and started to follow Mr. Icahn’s Tweets, and (c) made monitoring those Tweets a priority over my job.  That seems fair, especially given the warp speed advantage that some media companies have and sell to others.

Remember, this all came about because the SEC was bullied into permitting disclosure through social media by the business press.

Which brings us to our last observation about this lunacy.  I don’t recall the SEC seeking public comment about the acceptability of permitting disclosure through social media. Why is that?  Why wasn’t there a debate about the burden to investors of participating and social media and the need to constantly monitor it in order to be an investor with any chance of fair play?

This entry was posted in Big Data, Regulation, SEC, Social Media and tagged , , . Bookmark the permalink.