The FBI believes that social networks are potentially fertile ground for fraud in mutual funds and, therefore, is reviewing Twitter and Facebook. So two officers have stated that direct an investigation into the use of confidential information in the markets within the industry of investment funds.
April Brooks, in charge of the New York office of the FBI, and David Chaves, a monitoring agent, have said it is difficult to predict what the next wave of fraud of this type , but are convinced that advances in technology and social networks will have a lot to do.
“Any technology which is new and which today does not exist, if there is any way exploit, exploit these individuals,” said Brooks.
Misuse of confidential information
He and Chaves oversee what the FBI called “Operation Perfect Hedge ‘, which has been accused more than 60 mutual fund operators, analysts and industry consultants.
Last week, the U.S. government accused a former employee of SAC Capital Steven A. Cohen, Mathew martoma , to be part of a plan he used confidential information that prosecutors said was “the most lucrative”of history, at $ 276 million .
Although Cohen, whose investment fund worth 14,000 million dollars is one of the most successful and well-known on Wall Street, was not charged with anything. The complaint says that transactions concluded Elan and Wyeth Corp in July 2008 before meeting some bad news about clinical trials in which both companies worked.
“Some believe that the use of confidential information is increasing and is reaching a peak. I would suggest that we have not,” said Chaves.
The researchers adopted Twitter
The venture capital funds, large institutional investors and investment firms like Muddy Waters (@ muddywatersre), have adopted Twitter as a platform to share their ideas and investment strategies.
“People have used Twitter as a powerful distribution mechanism, occasionally with a significant impact on the market , “stressed the independent analyst Daniel Yu, an avid user of Twitter with the username @ LongShortTrader.
Studies and research reports have shown that the social network can be used as an early indicator of change in investor sentiment about titles and products. This allows Twitter data used to predict price movements in the market.
The two officers have explained that there is a campaign against the industry investment funds popularly known as “vulture funds” – but their research is part of an effort to return to the markets fairer for all.
“The message is that we are out there, and we will continue to be,” said Brooks. “This type of rape, this crime impacts all , “he added.