Social media help fuel stock hoaxes

In such hoaxes, anonymous users set up accounts with names that sound like prominent market players, issue negative commentary, and spark massive declines. The selling that follows shows how the rapid spread of information on social media can make for volatile trading, and is a warning to investors who trade on news before fully verifying the source.

Pump and dump schemes aren’t the only sort of problem afflicting social media. Fortune’s Philip Elmer Dewitt has reported about his suspicions regarding hedge fund manager Doug Kass. According to Dewitt, Kass’ tweet repeating a rumor about an Apple stock split (which didn’t happen) led to a jump in the company’s stock valuation.

  • tylernol

    brief jump, followed by a sell-off that brought the stock $15 /share lower after the investor meeting.. rumors like this are dangerous because they make it seem like the company is “failing” to deliver on expectations, when the expectations are pure fabrications set up by manipulators.

  • We need new laws and enforcement with serious penalties to strangle this practice in its crib.