Culling Facebook "Trending" Stories is a Good Thing

Facebook workers often omitted conservative political stories from the website's "trending" list, the technology news site Gizmodo said on Monday in a report that sparked widespread comment on social media.

An unnamed former Facebook employee told Gizmodo that workers "routinely suppressed news stories of interest to conservative readers," according to Gizmodo, while "artificially" adding other stories into the trending list.

Lets keep in mind this story is on Gizmodo, and is based on ONE anonymous alleged former employee. One. Anonymous.

Digging deeper, it appears that was was actually happening is that the Facebook "curators" would replace stories from sources that are questionable, and replace the story with one from a more mainstream source.  While that might mean that more "conservative political stories" are being removed, it might also mean that there are more wacko and unethical conservative websites out there. They would also remove hoaxes, regardless of how many people reviewed the story.

Remember, we are talking about the "Trending" section, on the top right of your Facebook Page. Your wall is not affected, you will still see all of the hoaxes and nonsense posted by your "friends."

Facebook has denied the reports and reading between the lines, Facebook is doing what most would agree is the right thing.  While claiming that the allegations would be not be “technically feasible," in a statement a Facebook spokesman said '[w]e have in place strict guidelines for our trending topic reviewers as they audit topics surfaced algorithmically....Reviewers are required to accept topics that reflect real world events, and are instructed to disregard junk or duplicate topics, hoaxes or subjects with insufficient sources." 

Isn't that what Facebook should be doing? It appears they are doing their users a service. There are enough hoaxes and lies on the Internet, and on Facebook timelines. I am confident that Facebook, has contributed to the dumbing down of our society. But this means that this portion of Facebook acts like any other news source, with editors culling stories, fact checking, and doing other "editorial" work. 

The reality is that Facebook is its users a favor if it engaged in such conduct, rather than continue to spread some of the absurd stories that come from these unknown websites who pretend to be a news source - conservative or liberal, they are all a danger to our well-being.

Report Claiming Bias in Facebook 'Trending' Topics Sparks Social Media Outcry - NBC News:



Facebook denies censoring conservative stories from trending topics

Can You Subpoena a Hashtag?

They seem to think so in Boston. The Suffolk County District Attorney has subpoenaed Twitter for "All available subscriber information, for the account or accounts associated with the following information, including IP address logs for account creation and for the period December 8, 2011 to December 13, 2011.” The "information" includes two hashtags, #BostonPD and #d0xcak3.

Technically they are not serving the hastag, but what does this mean? They want the IP address of everyone who posted a tweet with those hashtags? I get it, they are investigating threats to the police, that's fine, but seeking the IP address of everyone who used those hashtags during a 6 day period? 

Brokers, Advisers, LinkedIn and Twitter

I was a panelist in January for a webinar on Investment Advisers and LinkedIn. We were all set to go, my slides were all prepared and submitted, and the day before the webinar FINRA released Regulatory Notice 10-06 – Guidance on Blogs and Social Networking Web Sites.

The timing of the release caused me to scramble a bit to re-work my presentation for the webinar, but it all worked out. It was a great webinar, as the other three panelists were experts on marketing and business practices for financial advisers, with significant experience using social media for marketing. A replay is available at InvestmentNews.com.

As to the release itself, there was nothing very surprising, but the guidance from FINRA was very helpful. The most significant part of the release was the discussion of Twitter, and its use by financial professionals.

A basic premise that underlies all of this is that the use of the Internet, in whatever form, is advertising, or a communication with the public, by FINRA and for investment advisers, the SEC as well as the state regulators. FINRA has specific rules regarding advertising and public communications. However, the rules are somewhat convoluted, and sometimes it is not intuitive when you attempt to apply those rules to new technologies.

One basic tenant of advertising rules that is true across the board – advertising and public appearances must be supervised, archived, and stored. And therein lies the challenge for Twitter and other real-time communications.

FINRA had two choices with Twitter – either treat it as a discussion in a chat room, or treat it as a web site. It’s like a chat room, in that it is real-time, but it is also permanent and lasting, like a web site. The difference is significant, since a web site requires pre-approval by the firm, and a filing with FINRA. A chat room discussion does not require pre-approval or filing. Both require archiving and storage.

For brokers and compliance departments, the distinction is not important; the question is how do you want me to treat these communications? Without guidance, most firms will do what was done with email – they will ban it.

Fortunately, FINRA’s approach to real-time social media, which includes Twitter, Facebook status updates and LinkedIn network updates, is reasonable, and workable. FINRA was faced with two choices, but adopted a third choice – treat tweets and similar posts like email.

Tweets and updates are not like emails from a regulatory perspective, since FINRA has always treated one-on-one emails and one-to-many emails differently, but kudos to FINRA for taking a reasoned and practical approach. The release states that firms may adopt supervisory procedures similar to those outlined for electronic correspondence (email) as set forth in Regulatory Notice 07-59. That notice provides that firms may employ risk-based principles to determine the extent to which the review of incoming, outgoing and internal electronic communications is necessary for the proper supervision of their business.

Allowing firms to treat tweets like email, and permitting firms to decide the best practice for their own business model, is a significant step. Some firms will continue to ban tweets, but others will use software similar to that used to monitor email, and allow their brokers to use Twitter.

This will require firms to adopt written supervisory procedures and train and approve brokers who are going to use social media, and the modification of the software that is used to monitor emails, but that is reasonable, once the software vendors upgrade their systems.

Writing the procedures and providing the training in the newest electronic communications methods may not be a simple task for some firms. However, Twitter has proven itself to be an excellent communications and marketing platform, one that innovative firms, and their brokers, will benefit from.

My next post will deal with LinkedIn and financial professionals. One heads up – think about recommendations and third party links!
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Mark Astarita, Esq. is a securities attorney who represents financial professionals nationwide on all aspects of their business and compliance needs. He has been online for over 20 years. Follow him on twitter at www.twitter.com/astarita

Kentucky Seizes Domain Names

Here is an idea that has not been well thought out. Kentucky, which prohibits online gambling, got a judge to issue a forfeiture order to internet registrars, seizing the domain names of gambling sites!

Say what you will about online gambling, but how one State believes it has the jurisdiction, or the right for that matter, to seize an internet domain name is beyond all rational thought. Kentucky says that the domain names are illegal gambling devices under state law.

That is doubtful, but there is simply no justification for the seizure of the device when the device is not located in the State.

An appellate court reversed, but it is on appeal again. There are a host of legal issues, starting with the First Amendment, but imagine taking this to its illogical conclusion? Some states will ban youtube.com because it promotes copyright infringement, others will try to seize every adult site in existence, and on and on and on.

Not good. Not helpful. Not legal.

Law.com has the full story, Kentucky Domain Name Suit Has Web World Buzzing. HT to LillyHill who is quickly becoming one of our favorite Tweeters on Twitter. Follow her, or follow me, or follow both.

Mackey's Defense and the WSJ Attack

Whole Foods has now added a section to the FAQ at its corporate website, "Who is "rahodeb" and why does the FTC quote this person?" The posting is apparently written by Mackey, and attempts to explain his actions in his Internet postings.

While Mackey's attempt to get his side of the story out is almost as questionable as his 8 year posting history, one has to wonder what the editorial board at the Wall Street Journal was thinking in its recent editorial. The editorial has an odd and almost juvenile tone, and downplays the entire episode. It also goes out of its way to take a shot at the SEC - "The SEC is now going to unleash its army of ambitious 27-year-old lawyers to read these blog posts to see if Mr. Mackey let slip any insider information."

First, the messages that we are discussing is Mackey's postings at a Yahoo! Finance Board, not at Mackey's blog. One would think that the editorial staff of a major newspaper would be aware of the difference. I suppose it is not an important mistake, but it is significant in the context of this discussion, since Mackey does have a blog, to which he posts using his own name.

Second, the SEC is looking at more than the leaking of inside information, as discussed here. There are a number of issues when the CEO of a corporation makes public statements - Reg FD comes to mind, as well as market manipulation; not to mention corporate stupidity. Releasing inside information is probably the least of the potential problems.

Third, an SEC inquiry is something that the WSJ should be applauding, not demeaning. We want the SEC to take a look and see if there was any inside information being leaked through those posts. While I have significant legal issues with the application of Reg FD to this posts, the SEC should look into it. And the concept that he is bashing a competitor while his company is planning to buy the stock is another topic that requires some investigation and review.

There are a number of posts at the board that warrant a second look. I am not saying throw an "army" at the issue, but no one should have a problem with the SEC putting one of its investigators to the task of reading the posts, making some independent judgments on their purpose and effect, and doing some followup investigation if warranted.

The snarky comment referencing the SEC's inability to hold onto staff members is simply inappropriate and lessens the impact...if any...of the entire editorial.

Mackey did make it to number 1 on TheStreet's Five Dumbest Things on Wall Street last week, with the title "Message Board Bandit"


UPDATE - Stockpickr has a collection of the Best of Mackey - selected quotes from his postings.

SEC Opens Informal Inquiry Of Whole Foods CEO Postings - WSJ.com

The WSJ and CNBC are reporting that the SEC has opened an informal inquiry into the online postings of Whole Foods CEO John Mackey about his company, and his competitor.

As mentioned earlier, Mackey has allegedly been posting comments on the Internet about his company and Wild Oats, a competitor, and he did so using a pseudonym. The postings have become important, as Whole Foods is attempting to purchase Wild Oats.

The postings provide fodder for an interesting number of securities law questions, but those are merely questions, not necessarily violations. For example, the SEC is reportedly looking at potential violations of Reg FD, or whether Mackey's comments contradict public comments from the company, or disclosure of confidential information.

But all of this speculation about the investigation overlooks an important point in the story thus far - Mackey posted using a pseudonym. He did not say who he was, and apparently gave no indication that he was in any way connected with the company. To those reading the internet forum where he posted, he was simply another interested user of the board.

It is therefore going to be unimportant, and meaningless, if Mackey posted information that contradicted information released by teh company. No regulator is going to seriously argue that the fact that some guy named "rahodeb" contradicts a press release from the company on an Internet discussion forum. Even the most gullible Internet user knows, or should know, that "rahodeb" knows nothing more than they do about the stock or the business of the company.

Which raises the question - can glowing comments by an anonymous interest posters be the basis for liability for the poster, and how far does that liability reach?

We know the answer for those who attempt to manipulate the price of a security - the answer is yes. Using any device to manipulate the price of a security violates 10b-5. But Mackey is not (yet) accused of attempting to manipulate the stock, and thus far, no one has indicated that anything he said was false.

We will keep an eye on this, because the questions, and answers, will change as the facts come to light. For example, today the WSJ reports that "rahodeb" commented on the company's financial projections that has not been disclosed, saying that eh company projected 12 billion dollars in sales for 2010, and added that he wouldn't be surprised if the number ends up being closer to 14 billion dollars. Depending on what else was said, and if this was in fact the posting, there could be a violation of Reg FD, if readers could figure out who the poster was.

Or, was he simply attempting to manipulate the price of the stock?

Interesting case.

The WSJ has collected some of "rahodeb's" posts here. The posting are still available on the Yahoo! board where the topic has, predictably, caused a raging debate.

Alias-Using CEO Bashes Competitor and Praises Himself

Most corporations stay away from Internet chat rooms and discussion boards. The thought of a public company posting comments and responses on a financial board regarding the stock would send shivers down the spine of most CEOs; not to mention their counsel.

In that context it was very interesting to learn that the CEO of Whole Foods has taken corporate interaction with the internet to a whole new level. It was revealed today that John Mackey, the chief executive officer of Whole Foods Market has been posting messages on the Yahoo! financial message boad for Whoe Foods over the past 7 years.

Bashing competitors - he said of Wild Oats: "The CEO, Perry Odak, had no food retailing experience prior to becoming CEO. Almost all the old OATS management has either voluntarily left or been driven out." and defending himself - "John Mackey is a fellow Texan that I know and like and I deeply resent the bashing he frequently undergoes on this board!"; Mackey is said to have posted over 1,000 messages on the board during 1999 to 2006.

Press reports quote him as saying it was "fun". Pretty odd conduct for a CEO, but the reaction was summed up quite well by a professor of business ethics:

For the head of one company to be using an alias to criticize another in a fairly prominent posting site seems to me not worthy of someone at that level of trust. What is he up to?" asked Buie Seawell, a professor of business ethics and legal studies at the University of Denver. "Any jerk can post anything on the Internet. But for the jerk to be the head of a corporation and to say he did it just for fun, that is just (baloney).