September 27, 2020 | AtoZ Markets – Hong Kong’s Securities and Futures Commission (SFC) has revealed that social media scams account for about 20% of market manipulation cases currently under investigation weeks after the police made arrests linked to the Next Digital rally.
Cracking down on organized investment fraud on online platforms is a high priority, said SFC chief executive Ashley Alder in a statement. To avoid falling victim to these scams, the public must be vigilant when offered unsolicited investment advice, or misleading tips, on social media.
SFC warns of social media ‘pump-and-dump’ scams
According to the watchdog, social media-based scams account for one-fifth of all ongoing investigations on market manipulation and warned against trusting information from platforms such as Facebook, WhatsApp, WeChat, Telegram, and Tinder. The SFC said that many scams often involved pump-and-dump practices where imposters pretending to be renowned analysts share tips to inflate share prices before selling stock they already held.
In response, the SFC has launched its own Facebook page to warn investors about the risk of fraud on social media platforms.
Although the regulator did not mention any specific case, the timing of the statement and new Facebook page coincides with the recent controversial rally of pro-democratic media company Next Digital.
Following the arrest of its owner Jimmy Lai, Next Digital share prices surged 1,200 percent in a few days. Although onlookers have attributed this to a rare showing of solidarity by regular investors, local police claimed that market manipulators were at play and led the arrest of 15 individuals based on such suspicions.
Read also: US Regulator Issues Cryptocurrency Pump And Dump Schemes Warning
At the time, the move was considered unusual as such investigations would fall under the remit of the SFC which only later issued a statement to clarify its position.
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