FBI Follows Twitter to Spot Fraudsters, While Traders Look for Opportunities

It’s long been known that law officials have looked towards social media products like Facebook and Twitter to spot fraudulent

It’s long been known that law officials have looked towards social media products like Facebook and Twitter to spot fraudulent activity from financial solicitors. With the global reach of the platforms, fraudsters are able to connect with a wide array of potential victims to launch ponzi schemes, penny stock promotion, or the selling of risky assets. As such, enforcement agencies have began to strike back by creating their own fake accounts to connect and spy on the activities of suspects.

In a new twist, FBI agents also admitted that they are using social media platforms to investigate insider trading. During an interview with Reuters TV for the the Reuters Investment Outlook 2013 Summit, FBI Special Agent April Brooks responded to a question about using new technology to spot perpetrators of insider trading and said “I will tell you technology will play a huge part, social media, Twitter. Any kind of technology that is new and doesn’t exist today, if there is any way to exploit it, these individuals will exploit it.” The statement follows the FBI’s charging last week of Mathew Martoma, a former associate with SAC Capital who was allegedly headed a $276 million insider trading scheme.

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The statements from the FBI follow the trend that more and more organizations are looking towards social media to gain a better idea in real time of what is going on in the markets. By analyzing data, firms are able to spot such items as whether traders are optimistic or pessimistic, if newbies are entering the market, and what are new trends currently captivating the market. The latter is useful for determining whether there is a new stock or asset class that is gaining popularity and could be ready to move. For law officials, a spike in interest may also be the result of suspicious actions taking place.

The use of real time analysis is also taking place in the forex and trading world, with the launching of products aimed at gauging social media to present trading ideas. In September, we posted about Dataminr whose product produces early warning signs of social activity and is being used by trading firms as well as government agencies. Another new firm is Knowsis who presented at our Forex Magnates London Summit earlier this month in the startup panel. Explaining the added value of monitoring social media in real time, Oli Freeling-Wilkinson, CEO of Knowsis stated “Social media, when used correctly, is an incredible market colour tool. For the first time ever, you can actually get a true gauge of market sentiment, and identify the news and themes that matter to the trading community, all in real time. This is incredibly powerful when looking for additional insight and actionable trading ideas.”

While still in its infancy, real-time search analysis is proving to be a real trend, with users discovering more and more markets where the data can be used to become more successful.

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