This article is virgin, posted here on Oct,17, 2013
Tips scammers start a Twitter account that appears to come from a well-known pro. They then make statements that are intended to move the market in their favor. And because Twitter has become a popular tool among short sellers and other traders who are hungry for breaking industry info, the scam sometimes works. Now the intra-day profit makers along with short term sellers are proving to be most vulnerable.
Getting lured to tips in this money-making market is quite natural in intraday equity trading but other trading platforms like future, option, nifty & commodity calls too are not spared. With claims of high accuracy, there is also jackpot calls as the newest trend which warrants for a quick reaction from investors leaving no room for a second thought.
Forged tips comes from the look alike portals, Facebook-a/c and tweets and innocent investors run after them to catch the golden moment. The sudden demand for a particual stock helps the share prices go up and investors finds the tips profitable. Once a certain price level reaches for the phishers sold their chunk. Market reacts and that particular stocks loses heavily leaving investors blank within a couple of hours.
The swelling audience
Social Media and India Today, India with 137 million internet users, 63 million(approx 45 percent) of this big chunk are active on Facebook alone. Moreover, India tweets at 5th rank as traffic data for twitter is considered. A hefty 30 percent facebook users are using mobile to logged in. This reflexes that this rising middle class having smart phones in their hand and enough money to invest in stocks, at least for a very short span. This very community is the target audience of stock-tips scammers.
The SEBI (Securities and Exchange Board of India), which primarily authorized to regularize the market has no clear guidelines on this. “It is solely a discretion of an investor how they get guided, but an awareness program is needed to make them beware of such frauds”, says SEBI officials.
The power of social media
On April 23, 2013, the Twitter feed of the Associated Press informs that Barack Obama had been injured in an explosion at the White House. The tweet was fake — the product of a hack — but given the namesake of AP, the news spread like wildfire, garnering more that 4,000 retweets. The US reacted and market crashed heavily. Reuters estimated that the temporary loss of market cap in the S&P 500 alone totaled $136.5 billion.
* In 2012, a LinkedIn user allegedly used the social network to promote fake securities.
Role of Government and Agencies
In US, the FBI and SEC have been targeting scammer who use social media, but the risk is still huge for traders who use Twitter as a source: the scammer may be caught and brought to justice eventually, but it’s long after the offending tweet causes the market to shift.
In US, the FBI and SEC have been targeting scammer who use social media, but the risk is still huge for traders who use Twitter as a source: the scammer may be caught and brought to justice eventually, but it’s long after the offending tweet causes the market to shift.
In India as our would-be moguls are falling victim to scammers who are trying to influence the market with social media accounts that are designed to look like they belong to top industry players, our governments and agencies are suppose to track the e-scammer at earliest, right before something big gets wrong.
Amit Sinha is a bilingual Columnist. He can be contacted at facebook.amit
