Social networking sites may have made the world smaller, but they have also resulted in an added security threat to businesses. Almost a third of all Internet users are on Twitter with around 175 million tweets being circulated a day. The speed at which information travels is the basis of how stock market swindlers work. It is difficult to pinpoint the source of a piece of information that has gone viral, and in the while that it takes to find and shut it down, the damage can be done.
This has now resulted in major companies putting together social networking wizards to find and shut down fraudulent information from circling around. Duplicate accounts of companies are created, and there is very little to validate authority for the untrained eye. Fake information is posted to drive down prices of stocks leading to mayhem. The resultant damage is the works for small-cap companies that work with a lighter volume of securities leading to higher volatility and moves that are outsized.
When it comes to stock market swindlers, it is not only the corporate world that is affected. There are now ways in which even the accounts of influential traders are not being spared considering how easy it has become to replicate. A recent victim of such fraud was Audience, which saw 300,00 shares exchanging hands in the two-minute window that false information was being circulated. It accounted for nearly half a day's volume before trading was halted on the stocks.
Irrespective of the kind of technology used, if there are false statements being made in a bid to drive stocks up or down or to make a profit, it amounts to fraud. There are no solid grounds on prosecution related to social networking based fraud, and this is an issue that has to be dealt with soon to deter stock market swindlers.