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July 16, 2007

How Many Sock Puppets Are Out There?

The New York Times’ Matt Richtel and Brad Stone have this piece today about Whole Foods’ John Mackey and his use of a fictional identity on Yahoo! message boards to promote his company’s stock while deriding competitors. In short, Mackey was a “sock puppet,” a term well-known to the blogosphere and one which Richtel and Stone define as “fake online identity to praise, defend or create the illusion of support for one’s self, allies or company.”

Mackey may, however, be the tip of the iceberg when it comes to CEO sock puppets. Paul Kedrosky is quoted in the piece saying as much. CEOs, it seems, are bursting at the seams to get the word out but propriety, good public relations and securities laws keep them from saying outright what their egos compel them to communicate, so they go undercover.

I take great issue, however, with one CEO cited in the piece, Overstock.com’s chief Patrick Byrne. Byrne, who posts on the Internet under the pseudonym “Hannibal,” says “Nothing about being a public figure compels one to surrender one’s First Amendment rights.”

Well, that might be right when it comes to any topic (politics, culture, taxes) aside from those that touch upon his company. But, Overstock.com is a publicly traded company and CEOs of publicly traded companies give up some portion of their First Amendment rights when they agreed to abide by the complex disclosure rules required by the SEC.

That’s why the SEC is investigating Mackey’s online actvities. And that’s why Kedrosky is probably right about Mackey being only the tip of the iceberg. It’s very hard to give up the right to speak, to waive one’s First Amendment rights, whether in the form of a nondisclosure agreeement or a legal settlement or an employment agreement or an SEC rule.

It’s just too tempting to dodge these restriction by donning a fake identity and spreading one’s opinion on the Internet. It’s human nature to want to have one’s say, whether you’re an outright, upfront blogger or a restricted CEO.

Posted by Cynthia Brumfield at 9:45 AM | Print | Comments (0)