US District Court, Washington D.C. last week held that โmoonโ emoji used in a tweet by an influencer can be interpreted by his followers to mean โto the moonโ and can be used to determine intention to mislead investors and commit securities fraud.
The case is with respect to an influential investor activist who in response to reports of drop in share prices of Bed Bath & Beyond tweeted โat least her cart is full ๐ โ. Within a few trading sessions, the share price of the company rose by more than 200%, i.e. from $10 to more than $30 as the shareholder suit alleges that the followers interpreted the tweet to hint that the share prices are going to the moon. Interestingly, the influencer itself exited the scrip after the rise of share prices making a profit of around USD 68 million. Subsequently, the share prices fell below $10 and resulted in the shareholders suit alleging securities fraud.
The judge also made important observations with respect to use of emojis and held that emojis like words express ideas, depending on context. And in the context of meme stock trading a moon emoji had significant meaning.
This is the second such judgment in recent times with respect to securities fraud. Earlier on February 22, 2023, US District Court, Southern District of New York in the matter of Friel v. Dapper Labs, Inc. while determining securities fraud held that even though words profit are not used in a tweet, the โrocket ship – ๐ โ emoji, โstock chart – ๐ โ emoji, and โmoney bags – ๐ฐ โ emoji objectively mean one thing: a financial return on investment.
These developments show how courts are evolving to determine communications resulting in violations of securities law.
Friel v. Dapper Labs, Inc. order has been enclosed for reference of the readers.
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