Emojis are a compliance problem, for real

Taken from the FCPA Blog, Richard Cassin

They appear in just about every Slack thread, sometimes strung together — a moon face, a rocket ship, a thumbs up. They’re shorthand substitutes for thoughtful responses that might come later. Because they’re shorthand, emojis are often ambiguous and intentionally non-committal, and that’s a problem for compliance.

“There are 200+ cases a year referencing emojis or emoticons,” according to Eric Goldman, a professor at Santa Clara University School of Law. He’s an IP specialist who tracks court cases involving emojis.

In one such case, DC federal district court judge Trevor McFadden said emojis are symbols and “may be actionable if they communicate an idea that would otherwise be actionable. . . . Just like with words, liability will turn on the emoji’s particular meaning in context.”

Judge McFadden denied a defense motion for summary judgment last year in a shareholder class action against a widely followed investor, Ryan Cohen.

The plaintiffs allege Cohen misled them when he used a side-eyed moon in a tweet about meme stock Bed Bath & Beyond. They interpreted that to mean Cohen thought the stock would go up (“to the moon”), so they bought, too.

When the stock went up, he sold all his shares, raking in gains of $60 million. The stock then crashed on news of his sale.

Cohen’s side-eyed moon emoji is at the center of the plaintiff’s’ pending case.

In Canada last year, a judge ruled that a thumbs up emoji can be the basis for a binding contract.

The defendant, a farmer, argued that his thumbs up “simply confirmed that [he] received the flax contract,” not that he had agreed to the terms of the deal.

The judge said a thumbs up emoji might be a non-traditional way to sign a document. Nonetheless, in the context of the parties’ dealings, it “conveyed [the defendant’s] acceptance” of the contract and was legally equivalent to a signature.

Lora Kelley, an associate editor at the Atlantic, wrote about those cases and the vagueness of many emojis. “The possibility of misinterpretation—or plausible deniability—might be part of the appeal of using emoji at work,” she said.

Emojis can be evidence of corporate malfeasance or worse, even when used inside companies among coworkers.

As the Wall Street Journal reported,

At FTX Group, expenses and invoices were submitted on Slack and were approved by emoji. These informal, ephemeral messaging systems were used to approve transfers in the tens of millions of dollars, leaving only informal records of such transfers, or no records at all.

Emojis also bring cross-cultural complications. Eric Goldman, the law prof who writes about emojis, said the thumbs up can be an affirmation of contractual assent. But in some cultures, it’s “offensive (it has the same meaning as the middle finger).”

Despite the ambiguity, or because of it, people in every company use emojis to talk to each other and, more dangerously, to outsiders (including intermediaries and government officials).

It’s nearly certain some of those emojis will lead to misunderstandings. An intermediary may think there’s a green light to buy a foreign official a nice gift, sponsor some travel, or agree to terms in a government contract that raise FCPA compliance issues.

I know. Emojis save a lot of time. That’s why we like them. We’ll respond with words later. But for now, the smiley moon face, thumbs up, or rocket ship will have to do.

Compliance officers have a lot on their plates, more than enough. But everyone, from board members to field staff, should know that emojis at work are dangerous.

My humble hope (cue the moon face with a crooked smile followed by praying hands) is that compliance officers will grasp the risks attached to emojis and include that message in compliance training sessions starting now.