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Twitter Becoming a Hotbed for Stock Manipulation

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Back in mid-July a group of fraudsters create a fake Bloomsburg News page in order to perpetuate a lie about Twitter being bought by Google in a $31 billion deal. As a direct result of this, Twitter's stock shot up by almost 8 percent and Wall Street went nuts. This is what's known as a 'pump and dump' scheme, since the people behind it will have waited for the stock prices to peak and then sold their stock before anybody smelled a rat. It's also called stock manipulation and it's all kinds of illegal.

Now though, rather than pumping and dumping about Twitter, fraudsters have taken to doing it on Twitter. Posting stock news on online forums is a time-honoured tradition, but on Twitter it's far easier to circulate unsubstantiated news far more widely far more quickly. In so doing, a public buzz is created which can (and often does) spur investors into acting quickly before the story gains any more ground, without taking the time to make certain that the news is legit.

Sometimes this is done with fake accounts, as with the Bloomsburg story and other times legitimate media pages are hacked, as with the 2013 Associated Press incident which had the site's Twitter reporting two explosions in the White House. The added barrier created by cases like that is that once they're outed as a hoax, political motivation is considered long before financial. The thing about stock is that it's so embedded in the global economy that just about any story can have an impact on it, in some way or another.

There are people out there who are working to combat this issue, most notably an analytics firm called Contix. There are certain clear-cut signs that a story is false, such as the wording of article headlines, the timing of the actual break and the kind of chatter that builds around it. The trouble is that these kinds of scams will only get more sophisticated as time goes by, so the discrepancies that give them away are only going to become more difficult to spot.

This is one of the largest, most ominous threats to the business world ever presented by the social media revolution. The stock market, in many ways, relies on the staggered release of economic information, it relies on being able to know things before other people. Global sharing has given rise to an age where that has become harder to control, but easier to manipulate.


Callum Davies

Callum is a film school graduate who is now making a name for himself as a journalist and content writer. His vices include flat whites and 90s hip-hop. Follow him @CallumAtSMF

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Twitter Becoming a Hotbed for Stock Manipulation Reviewed by Callum Davies on Tuesday, August 18, 2015 Rating: 5
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