Hong Kong police and Securities and Futures Commission (SFC) have charged 13 suspects, a syndicate, of a sophisticated 'ramp-and-dump' scheme, otherwise known as pump-and-dump scheme , due to having committed several offences.
The charges came after a joint investigation by law enforcement and the financial market watchdog against the fraudulent stock investment schemes. The syndicate members allegedly violated regulations around market manipulation and money laundering within the schemes.
Announced on Friday, five of the suspects are facing charges of conspiracy to defraud and have conspired to create a scheme with the intention of defrauding the securities market participants. Two of them, along with the other eight, are also facing money laundering charges.
They are now out on bail, with bail bonds ranging from HK$50,000 to HK$1 million. However, they cannot leave Hong Kong and were required to submit all travel documents.
The official announcement detailed that the suspects allegedly organized and executed the 'ramp-and-dump' schemes in the shares of the two Hong Kong-listed companies. They promoted the stocks on social media and manipulated the trading of a large volume of the stocks using a number of nominee accounts.
Allegedly, the five primary suspects conspired with the other individuals between October 2018 and May 2019 to corner the stocks of the targeted companies. Then they started social media campaigns to convince investors to purchase those stocks.
Once the prices of the stocks were ramped or pumped, the suspects sold their holdings in the two companies making massive profits. In addition, it resulted in the collapse of the price of the stocks once demand dried up.
Rampant Frauds
Pump-and-dump schemes are rampant around the globe and regulators are actively cracking down on them. Earlier, Australia’s ASIC infiltrated Telegram groups coordinating such fraudulent schemes.
Last April, the US SEC busted a penny stock pump-and-dump scheme and charged 16 individuals that generated more than $194 million in illicit proceeds globally.
