The Billion Dollar “Tweet Heard ‘Round the World” and the Hackers that Caused It

One of the biggest news stories that popped up on our Twitter feeds today was the hacking of the Associated Press’ Twitter account. Earlier today, the AP’s account stated that there had been explosions at the White House and that President Barack Obama had been injured.  The S&P Index, in about two minutes, lost $136 billion. Once the world realized this was due to a hacked account, the market recovered. This massive event, that lasted about 3 minutes, highlights two huge risks that technology imposes on people using Twitter and engaging in algorithmic stock trading.

The first and more relevant issue raised by this incident, in relation to our class, is IT security. Hacks have been steadily escalating over the past few years even though Twitter has vastly improved its security quality. Recently, 60 Minutes and 48 Hours, both CBS News sites, were hacked over the weekend in relation to the Boston Bombings. In February of this year, an estimated 250,000 passwords were hacked in a cyber-attack on Twitter. As Twitter becomes more heavily relied on for immediate news, as it was with the Boston Bombings, something has got to give. In order to combat this, Twitter must either increase their security and/or editing capabilities in regard to erroneous tweets, or people will have to stop relying on Twitter for important news. Google, Facebook, Dropbox, Yahoo Mail, and Amazon all require a two-step verification system. While, if one can simply guess major news corporation’s or company’s password, than one can hack into their account.

Rick Fier, director of equity trading at Conifer Securities LLC, said this earlier today in an interview, “No human believed the story. Only computers react to something that serious disseminated in such a way. I bought some stock well and did not sell into it. Humans win.” This quote raises another question about the double-edge sword of technology interfering with normal every-day transactions.  Walter Todd, chief investment officer of Greenwood Capital Associates LLC, said in an interview, “It’s one thing for an illiquid stock to do that but how does a multitrillion-dollar market do that? That’s very disturbing to me. It’s unnerving.” I would have to agree that computers placing bets worth billions of dollars based on false information at an instant is indeed quite unnerving. This brings into question the reliability of algorithmic trading programs. Some of these programs scan news headlines, and tweets, and are told to buy or sell stocks depending on what information is gathered. Granted, the computer trading systems would not have rapidly sold stocks without Twitter being hacked in the first place, but they lacked the judgment to realize Twitter’s errors.

Based on today’s events and Professor Ransbotham’s lecture on the importance of IT security, we must slow down and remember that technology is in fact a double-edged sword. This past week, because of the tragic events that took place, we were able to see first-hand how good and bad technology can be in a world where information is demanded immediately. It was incredible to see on Twitter, in real time, the events that were occurring, especially when we all were so close in proximity to the action. It was not incredible for the missing Brown student to be falsely identified as one of the suspects by Reddit. We, as users of social media tools, need to understand this reality in order to effectively use these tools in a beneficial manner. In conclusion, the lessons we have learned today are: don’t believe everything you see on Twitter, create an extremely complicated Twitter password, and, according to Barry Schwartz, a financial manager, “Don’t let computers rule your investments.”

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10 thoughts on “The Billion Dollar “Tweet Heard ‘Round the World” and the Hackers that Caused It

  1. This is a great post. Worth remembering that just because the market in aggregate recovered in a few minutes, that doesn’t mean the investors did. A group of people lost $136 billion because of a hacked twitter account today. Another group of people made $136 billion because of a hacked twitter account today.

  2. Great post. I was very interested to hear more about the implications of the hacking after hearing about it in class. I think it is so sad that people do these types of things and spread rumors for the thrill. (I’m not sure what else they are getting out of it) I liked how you connected it to the events of last week. Complete illustration of the double edge sword. On the one hand I was so happy to find out that the suspect was in custody before the they reported it on the news but I also didn’t like how twitter was compromising the work of the police. I think it is going to be extremely interesting to see how our social media literacy develops. Are we going to be able to master the art of detecting what’s real and what’s not or are we going not going to be able to rely on twitter as an accurate source?

  3. This is a really interesting blog post. I liked that you were able to relate what we have been learning in class to a recent event, and I liked that you used many different types of multimedia. The graph especially was helpful to see how much the tweet affected stocks. There obviously needs to be extra security on these sites because it doesn’t seem that one password is enough. Even though the financial manager said ‘don’t let computers rule your investments,’ I think it is part of human nature to be influenced by any negative news and the actions of other people. Our first reaction when something bad happens is to assume the worst, take action, and find out what happened. It is important for people to monitor the Internet and be smart about deciphering what is true and what isn’t on the Internet, but this can be hard to do when a crisis happens, even if it is fake.

  4. Great post. I’m curious to see if the SEC will get involved or how they will handle situations like this in future. Obviously this is problem as it effects our economy even though its only for a little amount of time.

  5. Going off of “ferrites” comment, I think the SEC will get involved obviously. I believe Prof. Kane mentioned in class or maybe it was in my business law class, but technology laws are usually 10 years behind the time, and this is a pertinent example of that. I am not sure exactly what the SEC will do, but I believe they will definitely investigate those that made a ton of money off of this hacking.

  6. This was a very well done post. I enjoyed the pictures which were relevant to the content and the video. In dealing with this problem of twitter account hackers, I think a balance needs to be struck between actual regulation and twitter user common sense. Professor Kane talked about social media literacy in class. I think along with stricter rules and punishments for twitter hacking coupled with a greater sense of social media literacy will improve the twitter world greatly. However, I think efforts on both sides are needed in order to be successful. While regulations will help, nothing can beat people editing and policing themselves and their fellow followers in order to make twitter a more trustworthy news source.

  7. Great post. I agree that it is very scary to think that the market could drop that much in an instant just because the computers saw that one tweet. It really does put into perspective how much of a double edged sword technology can be. This is definitely another lesson for us to not believe everything we see on social media, especially something so important like this tweet. I also agree that if twitter doesn’t want to lose all credibility, it has to prevent hacks like this from happening again.

  8. Great post. It’s unnerving that one tweet can affect the stock market so greatly. Before reading your post, I didn’t realize that the large dropped was related to the computers reaction to the news not actual humans. It started to make more sense to me when I thought about it, but nonetheless it is still scary possibly even scarier. If we allow computers to do our investing and other exchanges dealing with money, I believe we will run into many problems. As mentioned by other commenters above, the SEC should definitely get involved. Complex algorithms cannot foresee things such as bogus tweets. This post and tweet remind us that we have to be increasingly aware of what we read on the internet and how we use this information. People should not jump to conclusions because one twitter account “said it first”. Today, many media sources want to be the first to report something and will risk it not being 100% accurate.

  9. Really a great post. I actually saw this tweet on Associated Press’s twitter before it was revealed that it was hacked, and I got extremely concerned that this could be the case. I checked CNN.com right after I saw it and saw no news stories about it, so I assumed that it was a false tweet. Unfortunately though, this tweet had a large effect on the nation, demonstrated on the occurrence in the stock market. Twitter has been a source of information on current events, especially in the recent events in Boston. Since people have become so dependent on Twitter as a news source, I think that it would be beneficial to Twitter to look into more security measures in attempt to prevent hacking. In addition to that, new security measures could increase Twitter’s reputation as a source for valid news updates, leading to further success for the company.

  10. Very interesting post. When you look at the first picture and see that huge drop and then sudden rebound, you think it is probably just an error. It is amazing to see that one tweet way able to cause such a drop in such a short amount of time. This definitely shows how technology is a double-edged sword as twitter has allowed news to be released even before major news network, but it is much less reliable information that is being released. As seen by the hacked AP account, it can have harmful effects. As you said we must continue to improve security to fight off attacks and since it would be impossible to block every attack, we have to remember that information off of social media is not always accurate.

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