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FBI scours social media for tips on fraud investigations, say top agents

The US Federal Bureau of Investigation uses social media to investigate potential instances of securities fraud, Reuters has reported, citing “two top agents” involved in an expansive insider trading case. FBI agents regularly search Twitter and Facebook for leads when probing fraud, they said.

The next generation of securities fraud will likely incorporate technological advances and new trends in social media, said April Brooks, who is in charge of the FBI’s New York office, and David Chaves, a supervisory agent. The duo oversees the FBI’s ‘Operation Perfect Hedge’, a long-running investigation that has resulted in the conviction of several dozen hedge fund traders, analysts, and financial consultants.

"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 the newswire.

The revelation comes as experts are increasingly turning to Twitter to measure investor sentiment about specific stocks and commodities, with social media serving as a basis for analyst predictions about such things as stock price fluctuations.

According to a report published in the Journal of Computational Science, Twitter can be used as an early predictor of the stock market’s average performance with an 87.6 per cent accuracy. The research, carried out by academics Johan Bollen, Huina Mao and Xiao-Jun Zeng, found that the mood and extent of ‘calmness’ among Twitter users can be a fairly reliable indicator of how the Dow Jones industrial average will fluctuate two to six days in advance.