Last Tuesday, July 14th, an unidentified social media scam artist released a phony Bloomberg insider report alerting investors to an impending $31B Twitter buyout. The cyber criminal published the article to a Bloomberg look-alike website he had created prior to the attack. News outlets played right into the scammer’s hands — unwittingly tweeting and sharing the phony article across the market as soon as the report was released.
Investors immediately jumped on the rumor, buying Twitter shares and sending the stock price skyrocketing — 8% in the first 8 minutes after the article was published. Once a Bloomberg spokesperson had publicly discredited the article as a hoax, Twitter shares instantly plummeted to pre-rumor levels — but not before our tech-savvy criminal cashed in on a small fortune.
The hacker was able to mimic the exact layout of Bloomberg.com by pasting its source code into the bogus web design. Although grammatical errors persisted throughout the spoof story, the criminal was crafty enough to attribute the article to an actual Bloomberg writer, as well as to include links redirecting back to the official Bloomberg site.
Scammers using fake reports to influence the market is nothing new. However, never has the good ol’ stock pump been easier to pull off than in the social media age. The anonymity, size, and speed of social media is a cyber scammer’s dream come true. For a reporter, discerning a report’s fidelity is difficult — policing such material is nearly impossible. The issue is compounded when news outlets pounce on any story with a pulse, unwittingly legitimizing the fraudulent story.
Twitter’s pump-n-run is only the latest in a rash of social media scams hitting the financial sector. Recently both Avon Products Inc and Penn Virginia Corp were targeted by scammers looking to manipulate stock prices for a big payout. In 2013, a fraudulent Twitter account claiming to be an analyst posted about fictional investigations into two small-cap companies. In the ensuing aftermath, their stocks plummeted by as much as 25%. Most famously, the AP Twitter account was hacked, posting bogus tweets about explosions in the White House. The DOW promptly dropped 150 points.
The moral of the story? If loose lips sink ships, loose tweets sink fleets. The stock market now operates at the speed of the internet.