$26.5 billion is the cost estimated by the University of Baltimore, of the damage caused by fake news around the world to financial markets, companies' reputations and the subsequent repercussions. The corporate world is not immunised against fake news. Corporate communication strategies must include protecting the authenticity of its content. Failure to do so can be costly. Finyear interviewed Jérôme Lascombe on this sensitive topic. He is the co-founder and president of Wiztopic, a software company that has developed Wiztrust, a platform whose purpose is precisely to curb the fake news phenomenon.

Fake news proliferates. So far, it seems companies have been relatively unscathed. Would you agree?

Jérôme Lascombe: It's true that fake news first targeted political and show business personalities by spreading false and juicy rumours, conspiracy theories or political propaganda. However, it would be a serious mistake to believe that fake news is a fringe phenomenon in the corporate world. Today, no company is completely safe from fake news, especially the financial sector as a whole, companies listed on the stock markets and those operating in sensitive areas such as health, defence, new technologies, and energy. However, a mid-size company or even smaller businesses are also open to this type of problem. It's important to be aware that in the age of social networks and real-time information, a company's reputation is quite volatile.

What are the factors accelerating the spread of fake news?

Jérôme Lascombe: There are broadly two types of motives for creating and spreading false information. The first is the pursuit of profit. In this case, it's about manipulating information of a financial nature to influence the stock market. The most notorious case is Vinci in November 2016. A fake press release had been posted on a fake site using the French group's visual identity. It announced the discovery of major accounting malpractices and the dismissal of its financial director. At the end of the press release, a fake phone number was given to check the information with the PR team. The Bloomberg news agency got taken in, and ran the story. This immediately caused the Vinci stock market price to drop by 18% for an hour. The hackers were never unmasked.

In the same vein, penny stocks, are highly exposed targets because of their volatility. In cases such as these, the aim is to take a position in one of these stocks, spread fake news that moves the price, then close the position and pocket the difference. It requires having detailed knowledge of stock market mechanisms to avoid detection. Nevertheless, it does exist and affects companies that are, in addition, not well known in the media.

What are the other motivations for spreading fake news ?

The second motivation is activism. Last June, the Swedish pension fund AP7 was also the subject of a fake report, which stated that they were going to stop investing in fossil fuels. This time, the perpetrators deliberately unmasked themselves, revealing their involvement in the militant environmental organisation, Extinction Rebellion. Its objective was to put pressure on the fund to favour more environmentally responsible sectors.

The same thing happened in 2019 to Larry Fink, CEO of Black Rock, the world's largest investment fund. In this case the action was triggered for slightly different motives. Those who carried it out, namely the Yes Men, certainly had activist intentions, but used their signature 'hoax' style. They copied and pasted the famous letter that Larry Fink sends out every year to financial decision makers and businesses. The letter was posted on a bogus site saying that Black Rock was stopping its support for carbon-based, climate-damaging companies. Many media organisations fell for it, including The Financial Times and CNBC News.
In some cases, competitors or activist investors may resort to "Dark PR" operations via communication agencies and "troll factories", and they may not be afraid of acting illegally. All these players share a common thread. They operate undercover most of the time, using techniques to make their actions anonymous, so that it is very complex to trace back to the source and identify the perpetrators.

Would you agree that traditional media often act as "super-spreaders" of fake news?

Jérôme Lascombe: This may seem paradoxical, but in a way they are victims of their own credibility! Information shared by Agence France Presse is perceived as being much more reliable than some local rag or an obscure blog. However, that is precisely what makes creators of fake news want to take advantage of that type of media. Managing to fool them means there will be a huge echo and ultimately a reputational impact on the company they are attacking.

There are also structural explanations. News time is now measured in seconds. This is particularly true for the economic and financial news, with constant competition between rival media. Journalists therefore have little time to check the accuracy and authenticity of information provided by a company. Checking and cross-checking is essential but it is a time-consuming task and the editorial staff do not always have adequate human resources. This is a weakness that hackers can exploit.

Finally, we shouldn't overlook the role of content-producing robots used by financial information agencies. More and more dispatches operate on a "fill the gaps" basis. Each type of dispatch has a given structure with fields to be filled in by the robot. This automation frees up the journalist from producing repetitive and similar texts such as the announcements of results. It also allows them to publish faster. The problem is that a robot is not capable of nuance, nor of the astuteness required to detect fake news. This overall compression of media time is a godsend for hackers, especially since making a fake website, a fake press release or a fake telephone line is technically not very complicated to do and not very expensive.

Given these risks, what are the implications for buinesses?

Jérôme Lascombe: First of all, there is the financial cost. A study from University of Baltimore estimated the global cost of damage caused by fake news in the finance sector to be $ 26.5 billion. Then there are the financial losses incurred by shareholders. This becomes particularly delicate if you have activist funds as part of your capital.

Another dimension is the legal risks. These hacking operations are the subject of in-depth investigations, for example by the French Autorité des Marchés Financiers (AMF - financial market authority). This body has the power to impose heavy fines if it finds shortcomings on the part of a business or media. On this point, the AMF's regulations are unambiguous. Producers of financial information are responsible for the security and integrity of the content they provide.

Finally, there is something that is less measurable in accounting terms, but just as crucial for the company: credibility and trust of the officers of the company.

Do companies have the means to protect themselves from it?

Jérôme Lascombe: Fortunately, there is no shortage of solutions for companies to anticipate and prevent hacking operations. They generally have monitoring and economic intelligence departments that scrutinise information in their sector. Then there are risk management procedures. But for the transmission of content to outside audiences, there are weaknesses as we have just seen.

At Wiztopic, we have developed a service called Wiztrust, which allows a company that is publishing financial or corporate information to certify it using the blockchain. Wiztrust extracts the documents' metadata, embeds it in the blockchain and generates a digital fingerprint that certifies the origin of the documents. At the other end of the chain, the recipients (journalists, analysts, investors, etc.) have Wiztrust access. If necessary, they can verify the exact origin via the platform. Either the sender's authenticity is confirmed, or Wiztrust notifies the recipient that the file was not certified and should be verified otherwise.

We launched the tool two years ago. We already have more than 200 users from forty subscriber companies, many of which are listed in the CAC 40.

It seems that fake news is entering a new era, particularly with counterfeit podcasts and hyperrealistic and believable deepfake videos. Do you see the same trend emerging?

Jérôme Lascombe: New forms of fake news are spreading now. When it comes to podcasts, voices are relatively easy to counterfeit using an AI-based tool. As for videos, it's a bit more complex to synchronise facial expressions and spoken words precisely. But some videos do achieve startling results. It is clearly a growing risk that we will have to take into account, in the same way as the corporate hacking we were just talking about.

Further reading:
- Download the Wiztopic white paper on Corporate Hacking and the manipulation of corporate information
- Understand at a glance how Wiztrust works (video below)