Fact4ac at the Financial Misinformation Detection Challenge Task: Reference-Free Financial Misinformation Detection via Fine-Tuning and Few-Shot Prompting of Large Language Models

The proliferation of misinformation online has driven demand for scalable detection systems. While most existing approaches rely on surface-level linguistic features or external knowledge retrieval, we examine truthfulness as a geometric property of a language model's representation space. We introduce a misinformation detection framework grounded in activation engineering, which leverages the latent geometry of transformer models. Our approach elicits a misinformation direction in the residual stream by contrasting activations from paired truthful and false statements, following the difference-in-means principle of Contrastive Activation Addition (CAA). At inference time, the last-token activation of an unseen claim is projected onto this direction, and the projected representation is fed to an Multilayer Perceptron (MLP) for classification. The procedure requires no fine-tuning of the backbone model, no external evidence retrieval, and no task-specific supervision beyond the contrastive pairs used to estimate the direction. We evaluate the method across 11 models from the Gemma, Llama, and Qwen families, ranging from 270M to 12B parameters, on three fact-checking benchmarks: AVeriTeC, LIAR, and FACTors. The falsehood direction is recoverable across model scales and architectural families, and last-token projection matches or surpasses zero-shot and few-shot prompting baselines on LIAR and FACTors, with the largest gains observed for smaller models. Performance on AVeriTeC is more limited, which we attribute to its evidence-grounded labeling scheme. These findings provide evidence that truthfulness is a structured, linearly separable concept in the latent space of pretrained language models, and point toward interpretability-driven misinformation detection as a practical complement to retrieval-based pipelines. The code is available on https://github.com/Malta-Lab/LaFaCt.

As large language models (LLMs) become default tools for online information verification, an implicit assumption follows them: that scale and general capability are sufficient for nuanced classification of misinformation discourse. We test this assumption directly on 900 Reddit comments spanning three PolitiFact-verified misinformation claims (environment, health, immigration), labelled as belief (propagates the claim), fact-check (corrects it), or other. We compare nine models across three paradigms -- BART-MNLI, three Llama variants, three commercial frontier LLMs (Claude Haiku 4.5, Gemini Flash Lite 2.5, Claude Sonnet 4.6), and fine-tuned DistilBERT and RoBERTa -- under universal and topic-specific label schemas. The assumption does not hold. Fine-tuned RoBERTa reaches 0.62 macro-$F_1$ against a best zero-shot result of 0.50 (Claude Haiku 4.5), at a fraction of the per-query cost; the supervised advantage is concentrated on the belief class, the implicit, affective category every zero-shot model under-detects. Scaling does not help: Llama-3-8B matches Llama-3-70B, and Claude Sonnet 4.6 underperforms the smaller Haiku under generic labels, collapsing belief detection to 0.17 and refusing outright on a subset of comments flagged as sensitive. This is a safety-alignment artefact, not a capacity limit. Label schema and topic jointly shape zero-shot performance, with the same model varying by more than 0.13 macro-$F_1$ across topics under matched labels. In a verification context, where missing belief is the costlier error, task-specific fine-tuning remains the more reliable choice despite the proliferation of large generative models.

Do Large Language Models (LLMs) possess genuine structural reasoning, or merely rely on surface-level pattern matching? The financial domain, demanding numerical precision and multi-step logic over long contexts, is an ideal testbed. Existing benchmarks fail to capture real-world industrial complexity, predominantly relying on multiple-choice questions or single-hop QA over cropped tables while ignoring intricate cross-statement dynamics and temporal de-cumulation. To bridge this gap, we introduce FinIndices, a large-scale benchmark evaluating data-processing fidelity over uncropped financial statements (up to 32K tokens). Utilizing an automated synthesis pipeline with adversarial traps, FinIndices encompasses Single-Index computation and Table-Index tabulation to test complex domain, temporal, and caliber reasoning. Our evaluation reveals two severe LLM vulnerabilities. First, a "Knowledge Bottleneck": despite memorizing formulas during pre-training, models demonstrate fragile pattern matching. Removing explicit formula hints causes performance to collapse (e.g., Gemini-3.1-Pro drops from 70.70% to 38.22% on table tasks), exposing fatal flaws in temporal de-cumulation and stock-flow caliber mismatch. Second, a "Structural Bottleneck": the intense cognitive load of generating multi-metric, multi-period tables actively drains reasoning capacity. Under structural pressure, LLMs that flawlessly execute isolated derivations regress to shallow heuristics, such as fetching incorrect adjacent columns or substituting deep accounting adjustments with lazy literal arithmetic. Finally, Supervised Fine-Tuning (SFT) yields substantial zero-hint gains (+8.54% Single, +3.82% Table), validating that structured logic can be partially restored via data-centric alignment.