Survey: Fake Financial News Having Deleterious Impact on Decision-Making

Chris Gaetano
Published Date:
Apr 28, 2017

A recent survey conducted by the AICPA has found that more than half of Americans, 58 percent, say that the proliferation of fake financial news is a serious threat to their financial decision making. Fake financial news can take many forms, such as paid ads masquerading as news pieces, politically-motivated panic stories, press releases meant to manipulate stock prices, or even outright scams.

This is not exactly a new problem: Bloomberg notes that a British man was arrested in 1814 for hiring people to dress as French officers and hand out leaflets announcing (falsely) that Napoleon had been killed, which sent stocks soaring, allowing him to make a tidy profit. More recently, the SEC launched enforcement action against 27 individuals involved in a scheme to publish bullish articles that pretended to be impartial but were in fact designed to promote certain stocks. said these articles appeared in respected financial publications like Forbes, TheStreet and MotleyFool. The SEC, in an investor alert accompanying news of the enforcement, noted that this is a complex problem that takes many different forms and can be conducted through various means like social media, investment newsletters, online ads, email, Internet chat rooms, direct mail, newspapers, magazines, television and radio. 

MarketWatch pointed to several recent instances showing how sophisticated the practice has become: fraudsters, looking to manipulate the market, have gone so far as to build fake copies of legitimate news sites to advance favorable narratives, such as one case where someone cloned the Bloomberg site to fabricate a story that someone was trying to take over Twitter. While the piece was debunked, the immediate reaction caused a spike in share prices. Speaking of Twitter, it also noted that people can, and have, used Twitter to spread fake news in order to manipulate stock prices. SEC filings themselves can be vectors for this phenomena, such as a man who entered a fake acquisition bid for Avon into the SEC's own online database. 

The AICPA said that the difficulty to tell what's real and what's not is having a serious impact on people's lives. The survey found that 63 percent of Americans say that the spread of fake news has made it more difficult to make critical financial decisions. In particular, it's made evaluating choices in healthcare (44 percent), stock investments (40 percent), retirement (40 percent) and buying or selling a house more difficult, as well as whether to start a business (35 percent) or even switch jobs (29 percent). At the same time, while people are aware of these difficulties, they also face pressure to respond quickly to financial news, which means there is less time to evaluate the veracity of whatever it is they're hearing. The poll found that 77 percent of people feel it's important to act fast on financial decisions in response to breaking news, with 40 percent saying it's very important to act fast. 

“Having accurate, reliable financial information is the basis for deliberate and rational decision making,” said Greg Anton, CPA, CGMA, and chair of the AICPA’s National CPA Financial Literacy Commission. “With few exceptions, making snap financial decisions is usually not a good idea. There is a fine line between reacting and overreacting, and Americans should proceed cautiously until they’re able to parse the facts.”

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