Thread by @Sanjay__Bakshi

The CEO of a large, multi-billion dollar IT company comes on the screen. He is looking distraught.

In a 3-minute video, which will destroy many people, he confesses that his company has been a front for a large scale money-laundering operation. He provides graphic details...

The CEO says that being an IT company allowed it to fake billions of dollars of export revenues as there was no physical movement of goods involved. Fake invoices were created on fake customers for exporting fake software.

The fake customers were criminals who had money parked in Swiss bank accounts and wanted a way to bring it into India. Those "customers" paid the company overseas as settlement of fake invoices and then the money was remitted to the company bank accounts in India.

The money was then paid out to various companies of the criminals in India that were posing as its local vendors.

Therefore, the revenues and profits are all fake.

He says because of something he did in his personal life, he was blackmailed into converting his company into a front operation. And that he had no choice because "they had photographs." But it doesn't matter anymore and it's too late anyway and now he wants to come clean.

The video is posted at 15:10 hours on the last Thursday of the month. It appears on Twitter using the very popular hashtag of the company. The official handle of the stock market regulator is tagged.

The stock trades in F&O. There are no circuit breakers.

Many things happen in quick succession.

By 15:13, there are 457 retweets. 7 of them are from people who have more than 150,000 followers. The stock is down 3%.

By 15:27 hours, there are 4,367 retweets and the stock is down 9%.

By 15:28 hours, it's down 27% and there are now 157 comments many of which are just are short phrases like "OMG" "Oh Shit!!!" and "WTF!!!!"

The open interest in the futures quickly reaches the maximum limit as short sellers pounce on the opportunity to short the stock.

The deep out-of-the-money put options have multiplied several times. The deep in-the-money calls of that morning will expire worthless in two minutes.

By 15:30 hours, when market closes, and all derivatives for the month expire, the stock is down 37% from previous day's close.

At 16:10, the company makes an announcement on the exchange claiming that it has become a victim of a fraud. The video was completely fabricated and that it has filed a complaint with the Police and also requested the market regulator to investigate the matter.

Seems far fetched? Look at this:

Deepfake technology is getting better, cheaper and more accessible. No one can stop this from happening.

Welcome to a new era of fake news!

In his marvellous book on Sherlock Holmes (amzn.to/2MjKzE7), Peter Bevelin writes:

Make sure “facts” are facts - Is it really so? Is this really true? Did this really happen?

Here is an interesting problem for you: If you are long a stock and something like this happens to the company, then should you wait to verify or panic and sell?

Check out some of the deepfake videos here..

bit.ly/2W7hkV1

"It is a difficult problem to solve because the technology needed to manipulate images is advancing rapidly and getting easier to use... And the threat is spreading. . ."
on.wsj.com/32Zu5pe (paywall)