Australian Securities and Investments Commission chairman Greg Medcraft has said its new artificial intelligence software will be targeted at rooting out fake news on social media, as concerns rise that it is already being used to manipulate the sharemarket.
Mr Medcraft told The Australian Financial Review that ASIC’s recently announced push to to use artificial intelligence to detect rogue market behaviour would include a focus on people creating fake news to circulate on social media, aimed at pumping up stocks.
The issue of bogus news stories on social media received wide attention following assertions it had had a significant impact on the 2016 US Presidential race.
However, experts warned Australian investors are already facing the problem of deciphering the real from the made-up online.
“ASIC is rapidly moving into the use of advanced technology methods to detect aberrant behaviour, including breaches of the law, at an earlier stage,” Mr Medcraft told the Financial Review, when asked about the use of fake news as a market manipulation tool.
“This is in addition to detecting such behaviour after the fact and seeking to take punitive or compensatory action.”
Mr Medcraft said the threat raised by digital market manipulation was real and that the new suite of technologies in use and under development would help build a more “pre-emptive” system and improve the market’s “cyber resilience”.
Under its plans, advanced data analytics will be employed to improve the ability to accurately predict market movements and therefore detect market manipulation and other criminality in real time.
“ASIC will be able to move quickly, to the point of proactively intervening as the market events occur,” Mr Medcraft said.
“The sophisticated use of data-matching and better analysis of trading patterns means ASIC can identify the likely leak of confidential information, and pair it to the suspect trades, and also follow the trail of any market manipulation back to the perpetrator and beneficiary.”
Spot market most vulnerable
But Australasian Investor Relations Association chief executive Ian Matheson warned that it would be difficult to track down and police culprits offshore, and the problem had been rising in recent years.
“Just after the Global Financial Crisis there was a bumper of false rumours relating to the sharemarket and listed companies put into the market, particularly by offshore hedge funds,” Mr Matheson said.
“A number of these were reported to ASIC and they set up a rumour hotline. I’m not sure if it’s been used a lot since that time but it’s certainly a concern to listed companies that false information can be fed into the mainstream media through the ether – through social media.”
Mr Matheson warned there may be no way to properly protect against false company news, and said companies would come under increased pressure to quickly set the record straight about rumours.
He said commodities trading on a spot price were the most exposed to potential manipulation by fake news.
Professor Axel Bruns, from the Queensland University of Technology Digital Media Research Centre, said the problem wasn’t purely about social media, but rather a new trend towards the legitimisation of “new-age propaganda”.
“We saw it with Brexit as well, where they said millions of pounds would come back to the NHS – that was an outright lie and was later proven as such. The same happened with Donald Trump in the US: mainstream media is overwhelmed trying to fact-check and test all these claims,” Professor Bruns said.
“Whatever anyone says can be reported and shared on social media almost immediately without giving journalists any time to fact-check.”
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