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Social Media Hacks, Will We Fall For the Same Tricks Again?

A recent breach of the Nasdaq bulletin boards reminds us that hackers are applying an endless stream of attacks. It begs the question, have any steps been made to protect algo traders from foul play in social media, including another AP twitter hack?

Hackers have long enjoyed tampering with traffic alerts, emergency alert systems, social media, and just about anything else that communicates messages. Some are damaging while others largely slip under the public's radar.

Back in April, 70 characters of text on AP's hacked twitter feed falsely claimed two explosions at the White House had injured the president. Countless trading algorithms tuned into social media picked up on the news and acted accordingly. That is to say, in under two minutes the Dow Jones fell 143 points and $130 billion vanished from the S&P 500. No big deal. President Obama was fine and the market promptly recovered and carried on.

The event brought attention towards how tightly Wall Street is tied to social media and how easily it is to manipulate the market through a well-aimed hack.

Twitter responded with some extra security measures including "two-factor authentication," which should stop hackers from breaking into accounts even if they get a hold of passwords. But are we doomed to be a step behind these rather obvious tricks? And should the potential to cause market disruption be potentially correlated to online security?

Security Concerns

If, like in April, AP tweeted another instance of a White House attack and Presidential injury today, would the reaction be any different?

According to Ben Curry, senior financial news analyst at Trade The News, probably not.

"High Frequency Trading algorithms are constantly changed, and it would be rather surprising if the developers hadn't added something to the sauce to provide a layer of protection against hacking, but hacking of Twitter feeds won't stop any time soon, and the market is moving more and more towards using Twitter to track activities. I can't say this is anything anyone will be able to prevent," said Curry in a phone interview.

"All of the major indices are being assaulted on a minute-to-minute, second-to-second basis. These guys are under constant attack. It's not a question of whether this is happening, it's how frequently will they be getting in."

Nasdaq Hacked (Again)

On Tuesday Nasdaq sent its Community forum members an e-mail alert that hackers have broken in and may have compromised user e-mail addresses and passwords. Members were advised to change their passwords.

The recent hack did no material damage to the site or market, but according to Yahoo! Finance it's believed hackers stole the lists of passwords that, when compiled into software, can speed up the process of breaking into more-secure sites that may contain valuable information.

This is not the first time Nasdaq was prompted to send out a hacker alert. Finextra reports "In 2012, hackers broke into Nasdaq OMX's Directors Desk, a Web-based service that lets management and board members of listed companies share confidential documents securely. An FBI investigation into the incident subsequently found out-of-date software, misconfigured firewalls and uninstalled security patches on the exchange operator's PCs."

[Who Was Really Behind The Twitter Hack That Wiped Out $136 Billion?] Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio

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