Minutes after the Associated Press's main Twitter account was hacked last month and a completely false tweet posted saying President Obama had been injured in explosions at the White House, the Dow Jones Industrial Average dropped almost 100 points. Though it quickly recovered moments later, the sudden downswing in stock prices is now being cited by one high-ranking US financial official as evidence of why there needs to be tighter regulations on high-speed trading.
"Bad actors putting out false information.
Gary Gensler, chair of the US Commodity Futures Trading Commission, a government agency that regulates the futures market, brought up the false AP tweet in a meeting yesterday with industry representatives as an example of "bad actors putting out false information" into the marketplace, adding that 100 years in the future, "they will use new technology, things that will make Twitter and Facebook look old style."
Gensler also said "last week’s events remind me once again," about the need for new safeguards around high-speed trading, in which computer algorithms are used to execute automated trades faster than under human control. Gensler added that the CFTC hoped to put out a new proposal for these safeguards in two months. Other attendees of the meeting quoted by the Wall Street Journal noted that the plunge caused by the false AP tweet was extremely short-lived and that the market quickly corrected it, proving it functions effectively right now without new regulation.
Still, the fact that a US official felt compelled to bring up this particular Twitter hacking incident — one of many high-profile media accounts compromised in the past few months — highlights Twitter's growing importance to all kinds of industries. Just this week, Twitter sent out an email to media organizations warning them that they would likely be targeted for future account hijackings and giving them tips on better password security. In this climate, a two-factor authentication system for Twitter accounts can't come soon enough.