What is new are some of the ways in which these fraudulent schemes are now being run. But before we get into the details. Read the PDF or visit us for more information at https://bit.ly/3G0i70B

1. https://www.shieldfc.com/
Tackling the Proliferation of
Pump & Dump Schemes
Market manipulation
schemes referred to as
‘pump and dump’ are
not new. In fact,
concerns were being
raised in the US Senate
as early as the 1930s,
but what is new are
some of the ways in
which these fraudulent
schemes are now being
run.

2. What is a ‘Pump & Dump’
scheme?
Pump and dump’ (also referred to as ‘ramp and dump’)
schemes essentially have two parts.
Firstly, the perpetrators orchestrate a campaign to inflate
(‘pump’) the price of a stock with false or misleading
information.
How big is the issue?
Pump and dump schemes have proliferated in the day
trading boom we’ve witnessed during the COVID-19
pandemic. In fact, in September 2020, the Hong Kong
Securities and Futures Commission (SFC). But there’s
another factor that is concerning regulators and that is that
these schemes are increasingly being operated via social
media platforms – Facebook, Instagram, WeChat,
Whatsapp, Telegram – and even online dating platforms.

3. https://www.shieldfc.com/
What actions should firms be taking?
Firstly, firms should be actively identifying groups of clients who
trade in the same stock, in the same direction, and around the
same time. These clients may have opened accounts at a similar
time or have the same account contact details. Finally, firms
must file Suspicious Activity Reports (SAR) / Suspicious
Transactions & Order Reports (STORs) and especially where there
is a sudden and unexplained price movement.
In a bold move, ASIC is infiltrating chat groups operated on
messaging apps to engage directly with – and disrupt – the
people involved in pump and dump activity. Talk about taking
the fight against market manipulation to the front lines!