As UK readers will probably know, last week [tag]rumours[/tag] spread that Halifax Bank of Scotland ([tag]HBOS[/tag]) would soon follow Northern Rock and Bear Stearns into ruination, and the shares of HBOS fell dramatically. Not only were these rumous false, but both the [tag]Bank of England[/tag] and the British securities regulator, the [tag]Financial Services Agency[/tag] (FSA), strongly denounced them. The FSA has begun an enquiry into whether there was deliberate share price manipulation, and if so, by whom. Walking this particular cat back may be quite difficult if the rumour mongers covered their tracks at the time.
“Shares in the UK bank plunged as much as 17 per cent last Wednesday when false rumours spread that it had sought emergency funding from the Bank of England. HBOS and the UK central bank categorically denied the rumours and the FSA launched an inquiry into potential market manipulation.
HBOS has been piecing together its comprehensive version of the share price movements to help uncover what caused the mass sell-off of its stock.
Its report is expected to provide information on the nature of the rumours that triggered the share price fall, where they came from and a breakdown of when they occurred.”
Because of BSE (mad-cow disease), foot-and-mouth disease, and bird flu, Britain’s farmers are now required to record every movement of every cow and every chicken between their farms, and a national database has been established to collect and analyze this data (held at the National Centre for Zoonosis Research). How soon before the FSA requires share traders to register all their social interactions and communications, and starts data-mining these to match information [tag]diffusion[/tag] patterns with share trades and price movements?