ASIC Warns Investors After Pump-and-Dump Convictions

Contents

01

ASIC Issues Warning After Pump-and-Dump Convictions

02

Convictions and Penalties

03

Rising Threats Ahead of Holidays

04

Global Concern Over Market Manipulation

05

International Action

ASIC Issues Warning After Pump-and-Dump Convictions

The Australian Securities and Investments Commission (ASIC) has sounded the alarm on pump-and-dump scams after four individuals were convicted for manipulating local stock prices through Telegram group chats.

Convictions and Penalties

The offenders pleaded guilty to conspiracy to commit market manipulation and dealing with the proceeds of crime. They were sentenced to intensive corrections orders (ICOs) and ordered to pay thousands of dollars in penalties.

ASIC Chair Joe Longo said the group “used social media to rig the market, artificially pump up penny stocks, then dump them for quick profits, leaving everyday investors to bear the losses.”

Rising Threats Ahead of Holidays

ASIC warned that pump-and-dump operators are increasingly targeting Australian investors during the holiday season. Scammers are also impersonating celebrities to lure victims onto messaging apps.

Global Concern Over Market Manipulation

The schemes have become so widespread that they were a key topic at a recent meeting of regulators from Australia, Asia, Europe, and North America in London. ASIC noted that criminal gangs are increasingly involved, with cybercriminals hacking brokerage accounts, exploiting regulatory gaps in cross-border trading, and running social media ads to attract traders.

Amanda Zeller, ASICs Senior Executive Leader for Market Integrity, explained that “pump-and-dump operators target small-cap stocks with low liquidity, which means misleading announcements or rumours can have a large impact on share prices.”

International Action

Global regulators have also taken steps against pump-and-dump schemes. New Zealand‘s Financial Markets Authority (FMA), the United States’ Financial Industry Regulatory Authority (FINRA), and the FBI have all issued public warnings to protect investors.