I’ve watched market rumors circulate across the New York Stock Exchange trading floor for a decade. Now they are moving at warp speed

Rumors are an integral part of the culture of Wall Street and global markets. Noun The Wall Street JournalThe popular daily column We Heard in the Street (one of my favorites) illustrates the importance of what is whispered in the halls of power.

I have been a member of the management and executive committees of the New York Stock Exchange for nearly a decade. Back then, if you stood in the press gallery overlooking the main trading floor and watched someone give a hearty gossip at one end of the trading floor, you could almost see it being transmitted from person to person across that enormous room.

Some rumors can be believed. Some are plain nonsense. Others fall somewhere in between. Countless validates over time or self-fulfilling. Many of them fade away – but in today’s digital world, they never go away. This chatter travels instantly across phone, private email, social media, and instant messaging platforms.

Regulators are trying to curb the use of unauthorized instant messaging platforms for business, hitting the financial industry in recent months with heavy penalties for misusing them. However, it is a fact of life, and it shows no signs of fading.

Rumors are spread by haters, spread by fools, and accepted by fools. not important

What is at stake between the best and worst response to rumors can be a collapse in stock prices, falling sales, continued damage to reputation, inability to attract and retain talented people, as well as changes in the company’s leadership.

Today’s headlines and commentary on social media show the damage that can be caused by individuals or groups with ambitious political or business agendas and actors adept at evaluating the kinds of assertions that will destabilize companies.

Rumors and speculation became timely tactics to drive organizational change. Even worse, speculation often comes from within an organization or its immediate market – and where there is smoke, there is usually potential fire.

Rumors spread without a clear source or basis are easy to dispel. If it’s patently false, the company can quickly dismiss and kill the rumor.

However, if later information gives any credence at all, these rumors lead to speculation.

“The only thing we know about the future is that it will be different.” – Peter Drucker

Lightning advances in communications and technology over the past decade have converged to make rumor and speculation a direct threat to businesses.

Within minutes of an incident, a few step forward to offer immediate and sometimes uninformed opinions on the story. Today, almost anyone can be considered an “expert” analyst or commentator.

Intense media competition drives the stories, sometimes with little editorial oversight. Commentary and gossip, once the exclusive purview of entertainment news coverage, is now a staple of business and financial news.

No longer boring, investing has turned into 24-hour cable business shows and non-stop headlines. As it spread across the Internet, opinions jumped from rumors and speculations to databases in a matter of minutes.

The C-Suite’s excesses, from inherent corruption to political clout, have added fuel to the fire.

Management is also constrained by Securities and Exchange Commission (SEC) Rule 10b-5, which requires executives to tell the truth. It is illegal for anyone to defraud or deceive investors, including through misrepresentation of material information, in connection with the sale or purchase of securities.

“Great things are made by a series of small things added up.” – Vincent van Gogh

In the current climate, management is guilty until proven innocent.

Companies that understand the power of perception and maintain the credibility and loyalty of their audience stick to a set of basics in ordinary moments of crisis.

Commenting “no comment” or “we do not comment on rumor and speculation” is not always an option. It may be easy to say and it seems convenient for lawyers but the markets are no longer buying it. In most cases, these comments will not stop the ongoing suspension.

Reply with facts. Facts drive out fiction. Provide sound reasons for the inaccuracy of the rumor or speculation. It can be difficult for executives and lawyers to agree on and use facts – but this approach is effective and durable in this digital environment.

Speak in simple English. The terminology of industry and legality greatly detracts from credibility. Express sympathy and show understanding, don’t be arrogant or try to stall because you don’t like the question. It will only add to the speculation.

Continuously communicate – and gain a reputation for doing so – with market participants and the media. Rumors and speculation love the information void. Collect, verify, and share information with investors and other constituents. Don’t wait until you have legal requirements to advertise – you’ll have many questions to answer.

keep vigil. Speculation has a long shelf life. It manifests itself outside the investor’s memory in databases and social media. Even after the target groups move on to the next story, the narrative can be retrieved and the issue reactivated by trolling at some point down the road.

Put in place a process and procedures for getting information quickly from the ground floor to the C-suite. Alerting management to positive, negative, and even lack of conversations about constituency agendas inside and outside the organization.

Black swan events are expected

Rumors and speculation are not orphans – they are born from a tension simmering somewhere – and then someone pulls the trigger.

In dealing with these critical moments, maintaining a company’s reputation depends on leadership. Grace and transparency under pressure are needed to match the depth, breadth, scale and speed of today’s internet world and marketplaces.

Leaders who are not prepared for more than 15 minutes will suffer shame. If you don’t control how you are seen, the markets and the media will do it for you.

Richard Torrenzano is the CEO Torrenzano group, which helps organizations control how they are understood. For nearly a decade, he has been a member of the Management (Policy) and Executive (Operations) Committee of the New York Stock Exchange. Richard is an in-demand expert and leading commentator on financial markets, brands, crisis, media and reputation.

The opinions expressed in Fortune.com articles. Comments are solely those of the authors and do not necessarily reflect the opinions or beliefs luck.

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