FBI probing investment fraud on Facebook and Twitter
Wall Street traders should be on notice: the FBI is monitoring Twitter and Facebook for tips related to securities fraud.
FBI agents April Brooks and David Chaves told Reuters that the next wave of securities fraud—which relates to insider trading, Ponzi schemes, and corporate fraud—is likely to be rooted in the Web.
"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," Brooks told Reuters.
Brooks and Chaves are running an investigation into the hedge fund industry called Operation Perfect Hedge. To date, the investigation has led to more than 60 convictions of traders, analysts and consultants.
"Some view insider trading as reaching this crescendo, and we have reached a top. I would suggest we have not," said Chaves.
A number of investors, hedge funds and research firms use Twitter to share investment ideas and strategies, reported Reuters, yet using social networks is not without its pitfalls for corporations and high-level employees.
Back in May, the Chief Financial Officer of fashion retailer Francesca's was fired for “improperly” sharing company information on Facebook and Twitter. Gene Morphis sent a tweet reading "Board meeting. Good numbers=Happy Board" in March, but that information had not been disclosed to shareholders before being made public, violating industry rules in the process.
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