Can unedited sites guarantee accurate reporting?
The rise of so-called "social" news websites provides new opportunities to both spammers and scam artists seeking to manipulate stock prices.
Social news websites such as Digg.com, Del.ici.ous and Reddit allow users to submit and promote news items. By letting other users vote in favour of a story, items get promoted to the front page, which in turn attracts additional visitors.
While the systems allows small publications and blogs to quickly reach large audiences, they provide no guarantees about a story's factual accuracy. This makes them a potential target of spammers and scam artists who might seek to exploit the social voting aspect for financial gain.
The topic received attention after Digg.com promoted a series of blog postings in which blogger Daniel Harrison speculated that Google is about to acquire Sun Microsystems. As the Silicon Valley Sleuth blog reported earlier, the speculations lacked a foundation and contained numerous factual errors. But that did notprevent the posts from reaching a prominent position on Digg.com.
Harrison for instance claimed that Sun CEO Scott McNealy "received 10m dollars in Sun equity" and described that as typical pre-merger behavior allowing him to profit from a jump in Sun's stock price after the merger would be announced. In a second post he attributed information about the transaction to an annonoymous source.
The transaction in fact was the result of McNealy exercising stock options, in which he first bought the stock and sold them on the same day. It was reported in a public filing to the Securities and Exchange Commission.
Several experts said it was unlikely that the prominent position on Digg.com was a result of "gaming", a phenomenon where a user manipulates the system to promote his story. Instead they attributed it to group thinking and gullibility on the part of Digg users.
Services such as Digg.com could be prone to stock price manipulation schemes where a people group up to give the story enough votes to reach the front page, or could use social engineering techniques by writing about companies that tend to draw people's attention like Apple, Google or Linux.
Using the internet to manipulate stock prices is far from new. There are known cases where scam artists spread fake rumours through bulleting boards or spam email messages in an effort to drive stock prices up or down. Such scams however typically involve small cap funds with more volatile stock prices.
"Tools like Digg, email and discussion boards have always been able to do this," noted Charlene Li, an industry analyst with Forrester Research covering online trends. "It gets easier. It's faster to highlight things. People are going to have become more aware of the shortcomings of these kinds of rumours," she warned.
Digg chief executive Jay Adelson too deemed it unlikely that the blog poster in this case defeated the page's ranking system. He also pointed out that one of the links on Digg.com were flagged by users to indicate that its content's accuracy was under review.
"I don't think it's possible to game Digg because it requires such a mass of people who have been vetted through our algorithms," Adelson said.
Digg ranks stories based on both a voting and a "karma" system, he explained.
While he decline to talk in detail about the karma system, he said that typically a story requires about 30 diggs to get promoted to the front page, but that the positioning is also largely influence by the karma system.
"The karma system takes into account some understanding of individual diggers. You are looking for patterns where significant numbers of users over some period of time are creating a signature. By determining how they digg a particular story, we are able to react automatically or by our staff," Adelson said.
There have been known cases where users succeeded to manipulate Digg into promoting stories to the front page. Last December an individual by the name of KoolAidGuy demonstrated that he succeeded in promoting a series of stories to the Digg.com front page by using a series of accounts to vote for particular stories. He claimed that he had been using his method for several months.
The rise of so-called "social" news websites provides new opportunities to both spammers and scam artists seeking to manipulate stock prices.
Social news websites such as Digg.com, Del.ici.ous and Reddit allow users to submit and promote news items. By letting other users vote in favour of a story, items get promoted to the front page, which in turn attracts additional visitors.
While the systems allows small publications and blogs to quickly reach large audiences, they provide no guarantees about a story's factual accuracy. This makes them a potential target of spammers and scam artists who might seek to exploit the social voting aspect for financial gain.
The topic received attention after Digg.com promoted a series of blog postings in which blogger Daniel Harrison speculated that Google is about to acquire Sun Microsystems. As the Silicon Valley Sleuth blog reported earlier, the speculations lacked a foundation and contained numerous factual errors. But that did notprevent the posts from reaching a prominent position on Digg.com.
Harrison for instance claimed that Sun CEO Scott McNealy "received 10m dollars in Sun equity" and described that as typical pre-merger behavior allowing him to profit from a jump in Sun's stock price after the merger would be announced. In a second post he attributed information about the transaction to an annonoymous source.
The transaction in fact was the result of McNealy exercising stock options, in which he first bought the stock and sold them on the same day. It was reported in a public filing to the Securities and Exchange Commission.
Several experts said it was unlikely that the prominent position on Digg.com was a result of "gaming", a phenomenon where a user manipulates the system to promote his story. Instead they attributed it to group thinking and gullibility on the part of Digg users.
Services such as Digg.com could be prone to stock price manipulation schemes where a people group up to give the story enough votes to reach the front page, or could use social engineering techniques by writing about companies that tend to draw people's attention like Apple, Google or Linux.
Using the internet to manipulate stock prices is far from new. There are known cases where scam artists spread fake rumours through bulleting boards or spam email messages in an effort to drive stock prices up or down. Such scams however typically involve small cap funds with more volatile stock prices.
"Tools like Digg, email and discussion boards have always been able to do this," noted Charlene Li, an industry analyst with Forrester Research covering online trends. "It gets easier. It's faster to highlight things. People are going to have become more aware of the shortcomings of these kinds of rumours," she warned.
Digg chief executive Jay Adelson too deemed it unlikely that the blog poster in this case defeated the page's ranking system. He also pointed out that one of the links on Digg.com were flagged by users to indicate that its content's accuracy was under review.
"I don't think it's possible to game Digg because it requires such a mass of people who have been vetted through our algorithms," Adelson said.
Digg ranks stories based on both a voting and a "karma" system, he explained.
While he decline to talk in detail about the karma system, he said that typically a story requires about 30 diggs to get promoted to the front page, but that the positioning is also largely influence by the karma system.
"The karma system takes into account some understanding of individual diggers. You are looking for patterns where significant numbers of users over some period of time are creating a signature. By determining how they digg a particular story, we are able to react automatically or by our staff," Adelson said.
There have been known cases where users succeeded to manipulate Digg into promoting stories to the front page. Last December an individual by the name of KoolAidGuy demonstrated that he succeeded in promoting a series of stories to the Digg.com front page by using a series of accounts to vote for particular stories. He claimed that he had been using his method for several months.
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