Tuesday, January 14, 2014

The Black Fund

Sometimes I like to think of plots for the great novel I'll never write. Here's one:

Imagine that a powerful non-state actor (maybe a criminal organization) brings together a team of sympathetic people with trading and hacking skills. The team is organized into a strategic planning group, an information collection group, and a market manipulation group.

The strategic planners identify corporate targets and direct a campaign of illegal information gathering to get an insider's view of the corporation's performance and finances. They then gradually take long or short positions in markets all throughout the world, through a complex system of accounts that conceals the fact that a single actor is behind it all.

Having taken position in the market, they may then direct a market manipulation campaign, leaking confidential information obtained from within the company, or disseminating misinformation through hacked social media accounts like Twitter or LinkedIn. Perhaps they will even find ways to distribute misinformation by hacking into news agencies and sending stories out over the wire, or hacking into corporate websites and email accounts to distribute false or misleading news.

Their goal would be to trigger a sudden market movement, during which they could cash in on their positions, then begin slowly unwinding them and closing accounts. In the mass of buy and sell orders that follow the market movement, it may be difficult to see the pattern of accounts that profit from the manipulation campaign.

The more money they make, the more complex their campaigns become, and the more investment they get from unsavory sources. Pretty soon, they're managing billions of dollars in assets, and enriching the kind of people we don't really want to see enriched.

I'll call it The Black Fund. That's probably the tenth novel I'll never write.

[Update 12/1/2014] A NY Times article about hackers with a financial background.

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