Singapore and Hong Kong authorities have joined hands to take on a syndicate suspected of operating so-called “pump-and-dump” scams on stocks listed on the Hong Kong Stock Exchange.
The authorities involved are the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force on one hand, and their counterparts, the Hong Kong Securities and Futures Commission and the Hong Kong Police Force.
According to the SFC, 10 people – including individuals believed to be the key members of the syndicate and their associates and some senior executives of Hong Kong listed companies – were arrested yesterday during searches of 33 premises in Hong Kong and Singapore by more than 190 officers of the SFC, the Hong Kong Police, the MAS and the Singapore Police.
According to MAS and CAD, a Singapore-based suspect was arrested and has surrendered her passport. Cash amounting to approximately $4.4 million, suspected to be proceeds from the pump-and-dump scam, have also been seized.
In such pump-and-dump scams, the syndicate would artificially pump up the price of a company’s shares by buying up the shares and spreading false positive news about the company via social media and messaging applications to induce unwary victims to buy the shares.
When prices are sufficiently high, it dumps by selling the stocks to the victims. The victims are left holding stocks with plummeted value and end up suffering substantial losses while syndicate members profit from the scam.
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According to SFC, the joint operation came about after it first discovered suspicious trading activities of the syndicate and referred the case to the MAS and the Hong Kong Police because of a cross-border element and the scale of suspected money laundering offences.
“Tackling investment fraud and scams on online platforms, such as social media ramp-and-dump schemes, remains a top enforcement priority of the SFC. To this end, the SFC will continue to deploy all the enforcement and supervisory tools at its disposals as well as collaborating with other local and overseas law enforcement agencies and regulatory counterparts,” says SFC’s director of enforcement Thomas Atkinson.
“A ramp-and-dump scam is a serious market misconduct offence under the SFO. Any ramp-and-dump scam, which also involved the active participation or wilful blindness of a controlling shareholder or senior management of listed companies, would be regarded as particularly serious,” he adds.
MAS and CAD say they continue to receive reports of victims falling prey to pump-and-dump scams involving overseas stocks. “Members of the public should be wary of stock recommendations offered on social media and messaging applications, and exercise caution regarding discussions on coordinated trading activities on these applications,” add MAS and CAD.
