SEC Plans to Strengthen Social Media Rules

In appearances last week, SEC chairman Gary Gensler said that his agency is focused on addressing market manipulation that takes place on social media, as well as insider trading.

The WSJ asked Gensler about revelations that the SEC wrote to Tesla CEO Elon Musk complaining that he had violated a 2018 settlement to pre-submit tweets that discuss production figures for his various companies. Gensler declined to comment on Tesla specifically but noted that technological advances will always create tensions between the SEC and the companies it oversees. He pointed to the short squeezes in shares of Gamestop Corp.

“We’ve seen this from the market, from the events in January, that social and trading platforms came together and we saw volatility,” the chairman said. “I would say it’s important, and this happened as well in the 1990s, when the internet came along, that traditional fraud used to be in paper form or in speeches and then moved to the internet. If it moves to social media, still we are going to ensure the best that we can within our resources to tamp out fraud and manipulation.”

“Rules mostly adopted 16 years ago do not fully reflect today’s technology. I believe it’s appropriate to look at ways to freshen up the SEC’s rules," Gensler said in prepared remarks at the Global Exchange and FinTech Conference. “Today, technology has changed how market makers interact, how trading platforms compete, how investors access those markets and the economic incentives amongst these various market participants. Further, retail investors can trade over commission-free brokerage apps. That wasn’t the case even a few years ago.” The comments followed the WSJ CFO Network Summit appearance.