Facebook as a tool for investor activism – the ying and yang of the internet

By April 14, 2008 April 15th, 2008 No Comments

Reported in the FT this morning Canadian oil and gas engineer Brian Hunter is using Facebook to co-ordinate frustrated retail investors in the £33bn Canadian asset backed commercial paper (ABCP) market:

As a 53-year-old oil and gas engineer living in Calgary, Alberta, Brian Hunter might seem neither a likely Facebook enthusiast nor an investor activist.

Yet Mr Hunter has taken on both roles with gusto over the past two months, harnessing the soc­ial networking site as a potent weapon for disgruntled – but otherwise voiceless – investors in Canada’s non-bank asset-backed commercial paper market.

And it looks like he has been successful, from IA news:

The biggest single roadblock to a proposed restructuring of $32-billion of asset-backed commercial paper was removed on Wednesday after Canaccord Capital Inc. tabled an offer to buy back the stalled notes held by more than 1,400 individual investors.By meeting the demands of its retail clients, Canaccord virtually guarantees a favourable result when ABCP noteholders vote on the workout at the end of the month.

In general I welcome this sort of development. To often through history the voice of small investors and other disparate groups the world over has not been heard as they lacked the resources required to co-ordinate themselves and get their message heard in the media. That has all changed now as anyone with time on their hands can use free tools like Facebook for the co-ordination function and if they are successful in bringing other people behind their cause the media will pick up on it. For example, Brian Hunter spends twelve hours a day on Facebook managing his campaign, which otherwise costs him nothing.

What we have here is an example of oft talked about liberating side of the internet. It is great to give a voice to the little guy who has too often been shouted down by powerful vested interests.

But there is a dangerous side to this as well. It is cool that people like Brian now have a platform to make themselves heard, but the response should be based on the merits of their case, not the fact that they have managed to create a buzz in the media.

I know next to nothing about the Canadian ABCP situation and the motive of this post
is to make a general argument about the use of the internet as a
platform for protest rather than comment on an individual case, but there are elements of Cannacord Capital’s response to Brian’s Facebook campaign that suggest they may be thinking more about their reputation generally than the rights and wrongs of whatever happened in the ABCP market. To be specific, I’m talking about the action by a broker to cover the losses of it’s clients when a market hits problems and the fact that a call from the Cannacord CEO to a potentially suicidal investor was made public.

As the internet changes the dynamics of minority protest, the response to those protests will need to change. Up until now most protesters failed to get press attention and were ignored, while those that were lucky enough or connected enough to generate some column inches stood a much better chance of seeing their demands met. Going forward I think we should all judge cases much more on merit – and that includes both the media and the responding companies/institutions. Otherwise we risk being overwhelmed by over-vocal people with a grievance.

Further, as the little guy is no longer at such a disadvantage then the natural bias in favour of the underdog needs tempering.

All this will take time, and progress will not be even, but provided we avoid the pitfall described above I think this development is positive and society will come to function better as a result of improved communication between its various constituents.

To finish, I’m going to move to an even higher level of abstraction. The trends I’ve described above are part of a more general shift to improved flow of information and increased transparency, which is increasing the benefits of open-ness, transparency, and honesty versus old ideas of control and manipulation of news flow. With that, however, comes a responsibility to act with integrity, and that means avoiding or trying to ignore hype and hysteria and look through to the substance behind the facade.

In this post I have tried to explain how that plays out in the protest arena, but very similar arguments apply in the area of privacy. Collectively we have a lot to gain if everyone shares information about themselves on the web, but that will only work if we make a conscious effort to look at the whole of a person as expressed online and avoid the picking out the pieces that help us make our case – e.g. using small examples of poor judgement as a reason for not hiring someone should be avoided.