Twitter, social media are fertile ground for stock hoaxes

prominent short seller David Einhorn raised eyebrows last month when it appeared on Twitter that he had to deny tweeted about Herbalife Ltd. "Appa...


Twitter, social media are fertile ground for stock hoaxes

prominent short seller David Einhorn raised eyebrows last month when it appeared on Twitter that he had to deny tweeted about Herbalife Ltd.

“Apparently I have a twitter lookalike” said the hedge fund manager, adding that he did not intend “tweet on stocks.”

triggered Einhorn, founder of Greenlight Capital, was a post-suspension for a Twitter account called @ Greenlightcap with the text: “The tug of war HLF $ at the end to come down to which more money to play with. I would not be in place in time for Bill # TeamIcahn. “

This might mislead people into believing that Einhorn – the rare tweets as @ davidein tend to about poker – was picking sides in the struggle between two other large investors Carl Icahn and Bill Ackman, who opposed positions in Herbalife.

Einhorn is not the only short seller was imitated on Twitter, which has become an important source of information for many investors. At the end of January, the shares of public and Sarepta Inc. Therapeutics Inc. plunged after mails that were supposed to be selling the researchers.

“Twitter and pump dump is something that the market, even if they are just a new way for people to find the plans that were ever made,” said Keith McCullough, CEO of Risk Management Hedgeye New Haven, Connecticut. He uses Twitter and has more than 22,000 followers.

In these hoaxes, anonymous users to create accounts with names that sound like leader, negative feedback, and spark massive reductions. selling below shows how the rapid spread of information through social media can do to market volatility, and this is a warning to investors acting in particular verify that the new resource.

FBI monitors Facebook and Twitter, and told Reuters in November that social media will be a major part of his securities fraud. ‘S website of the U.S. Securities and Exchange Commission has issued a warning that the scammers can use social media “to appear legitimate to hide behind the anonymity and reach many people at low cost.” And the Financial Industry Regulatory Authority has implemented social media agents, forcing them to keep records of its use.

In January 2012, the SEC charged a counselor tries to sell fictitious securities by LinkedIn Corp., a caterer online social network for professionals.

“If some perpetrators have learned the hard way, using social media to defraud investors leave an electronic trail of footprints for our researchers to follow,” said John Nester, a spokesman for the SEC in Washington, DC

research information

investors may increase the risk of being deceived by the confidence of the Twitter accounts of users established and independent research on a tip or rumor.

In addition to Twitter, another popular site for traders Stocktwits.com, where users can send messages almost exclusively on the stocks. These sites are in some ways more advanced versions of online chat rooms that were popular during the dot-com boom. Rumors in the rooms flowed, and became a fertile ground for reliable information.

Twitter and StockTwits best filters – mimic Einhorn account was suspended shortly after the misleading post -. false information but the crane can not be entirely stopped

StockTwits

not allow discussions penny stocks “, as those most vulnerable to being pushed around,” said Howard Lindzon, based in San Diego company CEO.

Twitter, who do not respond to requests for comment, audit of accounts of public figures, with emphasis on the “users very popular in music, theater, fashion, government, politics, religion, journalism, media, advertising , business and other key areas of interest, “said the website.

analytical companies are also emerging to help companies navigate social media.

Activity in hearing audio chip maker, with a market value of $ 275 million, is an excellent example of the danger following sources that are not what they seem – and again social media scanners see an opportunity.

The first false tweet was posted on 8:44 New York on 29 January by someone who claims the short seller Carson Block of Muddy Waters are. Block is best known for exposing accounting problems and take short positions on a number of Chinese companies listed in the United States.

The share decreases

do not accelerate until after 2 hours, when trading arrested, and more than 300,000 shares traded within two minutes, much more than the daily average volume of the stock of approximately 186,000 shares.

Dataminr

, a New York-based Social Media Analytics company that monitors activity on Twitter stock, says he has a warning on the wrong tweet sent at 12:28 pm The company “was to its customers a rumor to warn in the market ahead of the market movement, besides providing the context of the truth of the message, “said general manager Ted Bailey Dataminr.

When

Dataminr refused to the text of the warning, the warning said transferred skepticism about public tweet, noting the increased activity of the account and the ‘proven expertise in the social graph. “

On the whole, these companies analytical scanning programs are not sufficiently advanced to be fully automated for the moment.

” We are strongly in favor of the human element in this, “says Emmett Kilduff, CEO Dublin-based Intel Aigle, a Social Media Analytics company that reports reviewed by a team of portfolio managers and analysts elders.

Another analyst

London based Knowsis, the filters warnings by market professionals. CEOs Oli Freeling-Wilkinson stated that the company believes that sends information, taking into account the location of the person, if they are an established professional market and how stocks react.

No system is in evidence, and feedback always expect much from time to time, goosed by Twitter at first, but later, as investors react to price movements. It is this aspect that people stay on their toes.

“There’s a pulse when the name of your movement can be seen like this, to shoot first and ask questions and find out why he moves, “said Sam Ginzburg, head of trading at the New York premiere in New York.

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