Accept it. Your little sister sees all and knows all.
In spite of being much younger, her observational powers and hearing are razor sharp. By being the youngest in the family, she has learned to be devious and scheming in order to make up for her smaller size and low standing. By being left out of events for older kids, she has had plenty of time to think about how to manipulate you and everyone else in the family.
You may be surprised to find that she has carefully trained her pet hamster to spy on you at all times, while a stuffed toy is placed in its cage to fool you or anyone else that happens by. Therefore, she has perfect information on you for blackmail purposes. You may think she and her friends talk about My Little Pony and Sailor Moon, but they actually watch and discuss every crime show and know how to avoid getting caught for anything they might do.
So fear your little sister. Kiss up to her and make sure she and her hamster always get a great gift for their birthdays and Christmas. Fail to do so, and your name is mud.