FBI uses Twitter, social media to look for securities fraud Matthew Goldstein and Jennifer Ablan, Reuters via Globe and Mail (Nov 26)

Beware tweets bearing stock market tips.

“The FBI sees social media as a potential breeding ground for securities fraud, and has agents scouring Twitter and Facebook for tips, according to two top agents overseeing a long-running investigation into insider trading in the $2-trillion (U.S.) hedge fund industry.”

But they might also indicate stock market trends.

“Studies and research reports have shown that Twitter can be used as an early indicator of changing investor sentiment around particular stocks and commodities. This allows Twitter data to be used to predict price fluctuations in the market.”

This reflects the same message as in How Truth and Lies Spread on Twitter (Business Week, Oct 31) – on the one hand social media provides instant information but misinformation moves just as quickly.

“Twitter proved effective not just as a newswire, but as a medium for distributed fact-checking. As quickly as the falsehoods emerged, journalists and city officials moved to swat them down. BuzzFeed’s Jack Steuf quickly revealed the identity of @ComfortablySmug, who issued a public apology Tuesday night. The Atlantic’s Alexis Madrigal, aided by Atlantic staff writer Megan Garber and social media editor Chris Heller and MSN international editor Tom Phillips—who runs a microsite, Is Twitter Wrong?, devoted to debunking rumors on social media—verified the stunning images floating across the Internet. Even the New York Post reported that Mayor Michael Bloomberg planned on barring passenger cars from entering Manhattan, only to be quickly rebuked by Press Secretary Marc La Vorgna.”