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Brokers… Post this at your peril

29 November 2021 Gareth Stokes

The advent of ‘digital everything’ and the ongoing migration into the world of virtual advice-giving has left many brokers and financial advisers feeling a bit disconnected from the real world. And the fact that we can attend presentations and interact with clients dressed only from the waist up, leaves us with the impression that we can push the boundaries of social norms on digital platforms. But can we? “There is no distinction between what we are doing online and what we are doing in the real world; or who we are online and who we are in the real world,” said social media law expert, Emma Sadler, during her keynote address to the 2021 Morningstar Investment Conference.

Forget the ‘personal capacity’ disclaimer

The audience of independent financial advisers (IFAs) and investors was warned that there was no such thing as ‘personal capacity’ in the social media context, and that disclaiming comments or posts as such was a futile exercise. Before getting to grips with the dos and don’ts of social media, Sadler was tasked with answering whether fake news and social media could move stock markets or individual share prices. The topic was chosen, said the conference MC, because of the well-documented market-moving capabilities of the likes of South Africa born Elon Musk. Musk’s tweets have raised the ire of the US Securities and Exchange Commission (SEC), and allegedly raised or lowered the price of cryptocurrencies Bitcoin and Dogecoin and Tesla Inc shares. 

Yes, fake news can move markets! And yes, social media, which is a central medium for fake news dissemination, has a part to play. Sadler used the 2003 hack of Associated Press’ Twitter account to illustrate the damage that fake news can cause. Immediately following the hack, a fake tweet was sent out announcing that there had been an explosion in the White House, and that Barack Obama had been injured. “The US stock market lost over US$130 billion in the space of about three minutes,” said Sadler. “This event illustrated that what happens online can impact not just what is up in the real world, but the markets as well”. Hacking poses a significant risk to high profile individuals and social media influencers, and utmost care should be taken to secure Facebook, Instagram, LinkedIn, Twitter and other accounts, whether these belong to firms or employees. 

Head in the sand approach will fail…

There are many among us who manage the risk inherent in social media accounts by simply not participating; but this ‘head in the sand’ approach is sub optimal. “We need to make sure that we have a voice on social media,” said Sadler, “so that if somebody hacks into our account, if somebody spreads fake news about us, we are not at the mercy of a sympathetic media to get the true and correct version across”. She added that quickly setting the record straight was one of the most important steps in reputation management, with certain caveats that will be covered later in this piece. 

Those who enjoy sharing and resharing news items on platforms like Facebook, LinkedIn and Twitter should pay close attention to the legal implications of their actions. For example, it is a criminal offence to share fake news about Covid-19, with the intention to deceive. Sadler explained that although direct intention was typically required for a successful prosecution in South Africa, it was possible for the courts to convict on the legal principle of dolus eventualis: “If you do something and you foresee a possible outcome, but you reconcile yourself to that outcome and proceed in the same way, you could still be prosecuted”. The best way to sidestep sharing fake news is to treat everything that you receive as unverified, and only share it once you can confirm the news from reliable sources. So, think twice the next time you decide to retweet a video of some guy advising against Covid-19 testing. 

Facebook, like running a public notice board!

Financial and risk advice practices are increasingly interacting with clients over digital platforms. Platforms such as LinkedIn, Facebook and Twitter are seen as cost-effective tools to share thoughts about investment or risk products, or to keep clients up-to-date about happenings at the practice. But CEOs and Key Individuals at advice practices must be aware of the risks that are associated with the firm’s social media presence. They must also think about the risks associated with their employees’ social media activities. Much of this risk derives from South Africa’s chain of publication rules. 

“If you are in the chain of publication of illegal content in South Africa, you are responsible for that content from a legal point of view,” said Sadler. “If somebody sends me a racist meme, and I press forward, then I become legally responsible for that content; it does not matter that I was not the creator or the originator of it”. Likewise, if you have the ability to stop something from being published, for example by removing it from your Facebook wall, and you fail to do so, you are also in the chain of publication. Sadler referenced an old judgement against the Dutch Reformed Church which held that managing a Facebook page was the same as having a public notice board and encouraging members of the public to come and stick their scrappy pieces of paper on that board. 

Social media to name and shame wrongdoers

There has been a significant shift in how social media posts can impact on individuals and the firms they work for… “In the past, it was very much what people did on Facebook, what they did on Twitter, what they did on Instagram, which could bring the company into disrepute,” said Sadler. “Nowadays, we see people messing up in the real world, and that conduct getting filmed and circulated on social media, creating what I call vicarious reputational liability”. In other words, something your employee posts is as likely to cause reputational damage as something your employee does in the physical world, which is filmed and subsequently posted by a third party. 

The reality is that an employee who has a LinkedIn account is a de facto spokesperson for their employer, and any social media or physical world transgressions are quite easily traced back to this profile. It is simple, said Sadler: “There is no such thing as professional versus personal capacity … if you bring your employer into disrepute, you can be disciplined”. And you will be found out, much to the horror of the many South African employees who have been fired by their employers for making disparaging remarks in apparently private WhatsApp groups. The bottom line is that your remarks can and will be reviewed in the context of your contractual relationship with your employer. 

The truth shall set you free

What can you do in the event your advice practice is on the receiving end of a defamatory social media post? It is thought that a quick response is the best form of reputational defence; but there are some important considerations. Sadler explained: If there is one ounce of truth in what that person is saying, you cannot respond. And if there is anything in that content that you do not want published on the front page of the newspaper, you do not touch it from a legal point of view at all. Assuming the response is defamatory and wholly untrue, you can respond via a legal or reputational channel or both; but the correct approach will depend on the unique circumstances. 

Each of us has a responsibility for the messages we send out into the virtual world… “We have to think about how our social media content impacts on the real world,” concluded Sadler. “When in doubt, apply the billboard test … if you would not put your post on a real world billboard, next to a huge photograph of your face, your name and the name of the company you work for, then you should not allow that post to exist in digital format”. 

Writer’s thoughts:
One of the frightening observations made during Sadler’s presentation was that social media posts made years ago could be unearthed to cause real prejudice today… Are you at all concerned about the reputational risk that may lie dormant in your or your practice’s social media histories? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].


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