5 fake news reports that caused real dips in the stock market

A faked AI-generated image of an explosion near the Pentagon on May 22 actually moved the stock market. While it may be the first AI image to do so, it’s not the first time fake news has led to serious financial damages. Here are five times fake reports caused real dips in the stock market in this week’s Five For Friday.

5: Fake White House explosion

In 2013, a single tweet sent the Dow Jones Industrial Average down 145 points in two minutes.

The tweet came from the verified Associated Press Twitter account claiming two explosions at the White House injured then-President Barack Obama. A separate AP corporate communications account quickly got on the record saying the tweet was bogus.

It turned out hackers had gained access to AP’s main account, sending the scary claim to its roughly 2 million followers. The tweet even appeared on the Bloomberg Terminal, flashing in front of numerous investors. The Syrian Electronic Army claimed responsibility for the chaos.

That is a bogus @AP tweet.

— AP CorpComm (@AP_CorpComm) April 23, 2013

4: Scottish man’s scheme

Scottish investor James Alan Craig faced securities fraud charges for allegedly sending fake tweets in 2013 to drive down stock prices.

The Securities and Exchange Commission said he made fake accounts posing as short-selling firms Muddy Waters and Citron Research, tweeting about fake investigations into two public companies.

Audience Inc.’s share price plunged 28% before the Nasdaq halted trading while Sarepta Therapeutics dropped 16% before the fraud was revealed. Craig, though, was reportedly too slow to capitalize himself. The SEC said he only made $97 on the trades, though the indictment claimed the scheme itself cost other investors more than $1.6 million.

3: United Airlines plunges

This one cost United Airlines a cool $1 billion in market value and resulted in a lot of finger pointing. Somehow, an undated Sun Sentinel article about United’s 2002 bankruptcy resurfaced six years later under “most viewed” on the Tribune newspaper’s website with the current day’s date at the top of the website header.

The Google News algorithm reportedly picked up the article as new, a research firm then sent out a summary of the article to a Bloomberg news service, Bloomberg flashed a headline and suddenly, the stock went from more than $12 to $3 before trading halted.

Even after it became clear United was not heading for another bankruptcy, the stock still closed down 11% on the day.

2: Zoomlion bribery scam

In 2013, Chinese journalist Chen Yongzhou confessed to accepting bribes to publish defamatory articles about heavy equipment company Zoomlion.

The New Express reporter said a middleman paid him tens of thousands of dollars to submit more than 10 articles under his byline that accused Zoomlion of false financial reporting and other crimes and deceptive practices.

The stock took multiple hits from the articles published over many months. Once Chen confessed, media reports suggested a Zoomlion rival was behind the scheme.

1: Fake Pentagon explosion

The AI-generated image of black smoke billowing near the Pentagon spooked the stock market in May, causing a quick dip shortly after markets opened.

The fake shot fooled news outlets like Russia’s RT, which tweeted the image and report under its gold-check account, and Zerohedge, which has a blue checkmark. An Indian news channel even broadcasted the image live, citing RT’s report.

The image quickly spread through a number of blue-check accounts that pay for verified status, including accounts deceptively made to look like news organizations. One account called Bloomberg Feed sported a blue check but is not associated with Bloomberg and was later suspended.

It may be the first time an AI-generated image moved markets, but experts fear it won’t be the last.