 "Street Food: Force of will vs force of technology")
Two unrelated pieces of information, one from a real source and another from reel, have brought into focus the roles played by people residing in the periphery of the financial markets and which could have a significant impact on these.
In a press release on May 16, the US justice department said Vadym Iermolovych, 28, of Kiev, Ukraine, pleaded guilty before a district judge for hacking, wire fraud, etc. He was not your friendly, neighbourhood hacker. He was the first to be convicted in a major securities scam in which, between February 2010 and August 2015, Ukrainian hackers accessed the computer networks of Marketwired LP, PR Newswire Association LLC and Business Wire. They stole press releases about coming announcements by public companies concerning earnings, deals and other material information. The stolen releases were shared with traders using computer servers abroad. The hackers even shared “instructions” on how to access and use the foreign server.
The traders generally traded ahead of the public distribution of the stolen releases. Their trading activities shadowed the hackers’ capabilities to pass on these stolen releases. The spoils were shared through shell companies.
At least 150,000 press releases were stolen by Iermolovych and his friends. He himself is said to have generated around $30 million (Rs 200 crore) in illicit profit. The total booty is upward of $100 million, by some estimates.
In India, too, a handful of public relations (PR) agencies handle most of the top listed companies between themselves. Two or three PR agencies handle the entire Initial Public Offering market. Does the regulator have any control over these PR agencies, which handle a significant amount of inside information? Are there enough safeguards to prevent misuse of this information, from within and outside the agency?
It is time the regulators took a closer look at these issues. That brings us to the second piece of information, from the George Clooney/Julia Roberts starrer, Money Monster. The movie has a sweet PR person, who initially tries to mislead but later listens to her conscience, and helps Roberts and Clooney with critical information that eventually helps them clean the mess they find themselves in. It also has South Korean algorithm writers and African labour leaders.
It is also every financial journalist’s nightmare come true. During the course of a typical workday, financial journalists, especially those dealing in stock markets, are required to read data and infer the future course of markets or stocks from it. Clooney, who plays Lee Gates, anchor of the titular show on a business new channel, takes this a bit far, often using cartoons, clippings from old Hollywood movies and cheergirls like those in the IPL Extra Innings show as a prop forhis wisecracks on stocks.
At some point, Clooney makes a casual remark about the stock of IBIS Clear Capital being safer than even savings deposits. Kyle, a worker who invested his entire inheritance in IBIS stock, is enraged after it all goes up in smoke after an alleged computer ‘glitch’. The film goes on to show how the glitch was actually a fraud by some humans.
The film also underlines why journalists should not take themselves too seriously and start behaving like players themselves. At one point, Clooney tries to talk up the crashed IBIS stock, hoping algorithms would pick up the broad-based buying and take the stock back to its glory. He puts a ‘triple buy’ and pleads with the market to go and buy, pitching it as the force of human will against the force of technology. After a false move up, the stock plunges back, bringing him face to face with money, the real monster.
