GameStop Reddit fiasco shows social media must be more accountable for illegal activities they help propagate

Imagine if, halfway down this page, we carried a pop-up ad from a bunch of guys calling on the Evening Standard’s readers to bet on shares rising in CDs-R-Us.

Being a bricks and mortar retailer of CDs and DVDs, many professional investors reckon CDs-R-Us is doomed to fail and have taken out big short positions against it - betting the shares will fall.

But the retail investors booking the ad know that, if they can mobilise enough money to keep betting on the shares rising, they will. So the retail punters will get richer and the shorts poorer.  

And so it comes to pass.

The valuation of the basketcase company that is CDs-R-Us ends up surging despite being an absolute dog of a business. 

Until, that is, the architects of this canny scheme start selling to crystallise their profit. 

Then, the whole edifice falls and those left with stock lose a fortune.

In reality, CDs-R-Us doesn’t exist and this scenario could never happen, because the actions described constitute market manipulation, and that’s illegal.

Newspapers aren’t allowed to publish the work of criminal enterprises. We would be prosecuted as accessories, fined and hung out to dry.

But, as ever, that doesn’t seem to count for social media. There, from antivax lies to racist rabble rousing, platforms get away with claiming they have no responsibility for what they publish.

So, Reddit and other platforms are used to criminally manipulate the share prices of uninspiring companies like GameStop but no action is taken.

We’re now getting a situation where companies in the UK are being affected by similar fears of coordinated attacks: heavily shorted Pearson and Cineworld have shot up for no fundamental reason.

The risk here is that we drive short sellers from the markets altogether.

They may not be popular, but shorts provide an alternative view on a company, keeping share prices honest. Without them, you get stock market valuations bearing little semblance to reality. That’s bad for anyone with a pension, life insurance or an investment nestegg.