Fact, Disinformation, Opinion. Beware.

11 July 2018

Media in all its forms plays a pivotal role in building support or contempt for a particular subject or target. The migration of journalistic content from print to online has created an easily accessible and uncensored encyclopaedia of information. Whatever your favoured term is - fake news, disinformation or malicious falsehood - the presentation of erroneous information as fact can cause incalculable harm to you and your business.

The latest revelations surrounding Cambridge Analytica and its access to Facebook users’ data have heightened the fear and distrust in the information that is freely available online. The circumstances surrounding the breach of privacy as well as the political motivations behind them provide a cautionary tale.

As technology advances and increasingly penetrates everyone’s daily lives, all are vulnerable to manipulation. In the fight to free themselves, the general public is becoming more suspicious and selective of the media it consumes. Less willing to accept that what they read is the whole truth; instead they want to reach their own conclusions, and this produces a new challenge for wealth owners, their families and their businesses.

Corroborating stories and fact-checking through online and database research are becoming increasingly necessary steps for anyone seeking absolute clarity. Oftentimes the quality of the source is an obvious indicator of reliability, but equally if additional sources back up the story then opinions will be formed. If you or your business are the subject, then your value and reputation are at stake. The seeds of distrust or confidence are sewn through the information people consume. Facebook had more than $50bn of shareholder value wiped out when the Cambridge Analytica breach was first revealed. Conversely, false rumours published online, such as the 2011 Twitter post about the solvency of Swedbank’s Latvian subsidiary, were equally damaging and had all the hallmarks of a bank-run when millions in deposits were suddenly withdrawn.

In circumstances such as these, your reputation becomes your most valuable asset.

In my role at Schillings I am increasingly seeing attacks stemming from information that is already publicly accessible. Activists, pursuing financial or special interest campaigns, may review historic company disclosures and seek to challenge broken promises, underperformance or lack of strategy and governance. They don’t swallow the prescribed version of events but they do seek to verify for themselves that the information is correct using their own research techniques. This is not a new concept but what is new is the pace through which they are operating and that the trend is now extending to more mainstream stakeholders and the general public at large. So what to do?

1. In a time of crisis, legal solutions may hold more water: Review the tone and coverage of the media and challenge any erroneous information. The media can either fan the flames or extinguish them.

2. Identify the source of the crisis and work to contain its spread: Undertake a cyber and corporate investigations exercise to tighten the net around the source and understand the motivations of those who are putting you and/or your business in the spotlight. Take professional advice on whether to engage directly or take legal steps.

3. Frequently audit your online presence at a personal, corporate and employee level: Knowing your vulnerabilities and level of exposure are a vital first step in mitigating and/or preventing an attack on your reputation.

4. Assemble a social media and chatroom listening tool: Some attacks often emerge from chat rooms. With a degree of anonymity, insiders and other stakeholders can publish either truth or lies. Those anticipating an opportunity to effect change and benefit from a market correction will trawl these, often private, fora to look for clues and the evidence to support them.

5. Ensure consistency in reporting: Address discrepancies between promises and deliverables. Don’t underestimate being taken at your word. Transcripts provide a good basis for campaign work and can be used to build a corporate governance complaint.

Having spent many years building activist campaigns for a hedge fund, I have seen how shreds of information can be woven together to formulate a persuasive argument around corporate governance and a Board’s fitness to serve its investors. When a campaign goes live, investors and the media will take the demands and arguments and work to corroborate them. The information that is freely available suddenly becomes either a shield or a weapon. 

False information online, left to fester, can become the evidence used to support an attack. Of course, discretion is exercised and judgment reserved, but when money is at stake, events can quickly overtake when reputational value is lost.

When it comes to facts, disinformation and opinion, beware. Guilty until proven innocent applies.

This article was first published by Spear’s on 16th May 2018. Click here to read the original article.

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About the Author

Susan Kent

Associate, Advisory

Susan leads investigations into individuals, complex investment and legal situations

646 934 6219