In a combined investigation with local police, 24 people were charged with market manipulation by the Securities and Futures Commission (SFC).
One of the defendants was the boss of what the investigators referred to as “a sophisticated syndicate operating ramp-and-dump schemes through a complex cross-shareholding network of Hong Kong-listed companies.”
They were hindered as part of a joint operation between the Independent Commission Against Corruption (ICAC) and the Securities and Futures Commission (SFC).
The SFC also stated that the fraudulent plan targeted the shares of six publicly traded firms which generated unlawful gains of $191 million.
The HK watchdog did name the individuals it suspected of engaging in this market misconduct, highlighting the fact that they teamed up with others “to corner the shares of the target stocks” and inflate their values by using several nominee accounts.
The chairman of a Hong Kong-listed business and three responsible officials from two brokers are among the arrestees. They were essential syndicate members.
Last week, 2 more individuals were implicated in money laundering offenses in connection to “a large-scale and sophisticated syndicate suspected of engaging in “ramp-and-dump” market manipulation,” as per a regulator. The suspects were brought before the Eastern Magistracy.
At a future time, it was believed that the scheme used various social media sites to persuade investors to buy those shares. The defendants then aggressively sold their shares at a profit just as prices started to fall as soon as demand dried up.
The SFC claimed that as more people are being targeted online and less of it is being committed through traditional cold calling, the profile of financial fraud is evolving. Scammers have upgraded the way they reach out to people via several well-known social media platforms; including Facebook, Instagram, WeChat, Whatsapp, Telegram, and even online dating services.
Scammers try to capitalize on fear
The agency also cautioned investors to exercise caution when presented with “inside information” or investing advice online, especially when complete strangers advertise small-cap or less liquid stocks on social media. Furthermore, it was revealed that this year, pump-and-dump frauds have attacked a large number of Hong Kong small-cap firms.
According to SFC data, these forms of fraudulent schemes aim to increase or decrease a stock’s price through recommendations based on incorrect or misleading advice account for 20% of the market manipulation cases the agency is now looking into.
The perpetrators of the so-called “ramp and dump scams” focus on social media platforms and utilize ever-more-elaborate schemes to convince victims to join. According to the SFC, they have occasionally used popular market pundits and well-known investment advisors as fronts to lure victims into the scam.
Despite the fact that there are numerous variations of these strategies, the watchdog claimed that certain campaigns employ fake research reports and forecast precise target values for a stock of a company.
- Published By Team Hongkong Journalist