Facebook is the hub of the global trade in endangered species: can securities law be used to force the company into action?

Stephen Kohn, a highpowered whistleblower lawyer (he repped both Linda Tripp and the UBS Leaks whistleblower) showed Wired his heretofore confidential SEC complaint against Facebook, which details the undercover sting operations undertaken by his clients to investigate Facebook's role as a platform for the illegal trade in the remains of endangered species, such as rhino horn, elephant tusks, and lion claws.

The Wired report makes it clear that Facebook is at the center of the world's endangered species trade; it's easy to find and get invited to private Facebook groups where you can buy or sell literal tons of products made from the remains of endangered species or the remains themselves.

Kohn sees an opportunity to force Facebook to take action on the matter -- and to cash out both him and his clients -- by using securities law, which constitutes an undisclosed material risk to Facebook's business, because the negative publicity could adversely affect the company's share price, and even expose it to civil asset forfeiture.

This route is interesting in that it leaves intact Section 230 of the Communications Decency Act, which absolves companies of the duty to police their users' speech (CDA230 was substantially eroded by SESTA). Kohn argues that he wants to hold Facebook liable for failing disclose negative outcomes from its users' activities to its shareholders, not for failing to police its users' speech.

Despite Kohn's many impressive legal victories, his theory has baffled many experts whom Wired consulted, one of whom called it "fantastical."

Facebook already includes the trade in endangered species in its enforcement actions, partnering with the WWF and training its moderators to recognize and halt the transactions.

Whatever you think of Kohn's legal theory, the undercover work by his clients is excellent and leaves no question that Facebook is at the center of a global trade that is driving animals to extinction. Whether chaing traffickers off the platform will do any good (they could simply go somewhere else, like a Tor hidden service) is another question altogether.

Kohn, who also has no social media accounts to speak of, was stunned. He had visions of a massive dragnet: FBI agents amassing warrants on every known Facebook trafficker and rounding them up in one epic bust. He also had fantasies of a huge payout: “If they fine those people and sanction them, guess who can get 10 to 30 percent of all these sanctions?” Kohn asks me with a giddy tone. “My whistle-blowers!” Of course, Kohn also would get a cut.

But first, he’d take the case to the SEC. Under those regulations, Kohn explains, groups of whistle-blowers can come forward anonymously and be classified as a single entity. The SEC offers some of the strongest anonymity protections of any government agency. But if, say, the FBI does pursue a case based on the evidence provided to the SEC, that protection remains intact.

Both the promise of anonymity and of an award, Kohn says, are critical to getting international wildlife whistle-blowers to come forward. “If you’re a whistle-blower outside the US, you may be at extreme risk,” he explains. “If someone contacts me from a foreign country, the more I can talk to them about layers of protection, the higher likelihood they’ll become a source.”

Tusks, Horns, and Claws: The Fight to Dismantle the Facebook Animal Parts Bazaar [Issie Lapowsky/Wired]