Getting #Fired for 140 Characters or Less
Twitter and other social media may be transforming our world, but they haven’t changed laws and company policies against disclosing sensitive company information. Take the recent firing – reported in The Inbox – by women’s clothing retailer Francesca’s Holdings Corp. of its CFO, Gene Morphis.
Francesca’s says that it fired Mr. Morphis for violating company policy after an internal investigation by the company’s board of directors, assisted by outside counsel, found that Mr. Morphis improperly communicated company information through social media. Rachel Emma Silverman of the WSJ reports that, while he was CFO, Mr. Morphis maintained a Twitter account called “theoldcfo,” where he tweeted about his work and other things. Before a Board meeting in March, he tweeted, “Dinner w/Board tonite. Used to be fun. Now one must be on guard every second,” and then, the next day, “Board meeting. Good numbers=Happy Board.”
The company did not say whether the internal investigators made findings under the federal securities laws prohibiting insider trading, although it is probably a safe bet that company policies that Mr. Morphis allegedly ran afoul of were written with those laws in mind. For example, as a publicly traded company, Francesca’s senior officials, including its CFO, are prohibited by SEC Regulation FD (for “fair disclosure”) from selectively disclosing material non-public information to people (like analysts or shareholders) who are likely to trade on that information.
So, if Mr. Morphis’s “Good numbers” tweet was material information not already widely disseminated to the public, he and the company could have a Reg FD problem on their hands. In any event, the company’s board could have concluded that Mr. Morphis was becoming a liability.
Despite new social media ways to fall into old legal traps, is there nothing new under the sun when executives and their companies clash? Stay tuned later this week when we will take a look at a legal issue that has come up in a closely-watched case involving a company, its former high-ranking employee, and a Twitter account.