Pump and dump
A lawsuit against four people allegedly involved in a Telegram-based “pump and dump” campaign targeting ASX stocks shows ASIC's surveillance methods are sophisticated and evolving.
You could make the case that the surge in online trading activity that took place during Covid-19 lockdowns and the behaviour that came with it changed markets irrevocably.
That period gave birth to the "meme stock" phenomenon, which led groups of retail investors in the US to band together to squeeze hedge funds shorting stocks like GameStop and AMC Theaters (as depicted in the Hollywood movie Dumb Money). In Australia, it led some retail investors to congregate on messaging platforms allegedly to co-ordinate illegal “pump and dump” schemes on the ASX. And ASIC was watching them.
The corporate regulator on Tuesday kickstarted a criminal lawsuit against four New South Wales residents for their involvement in a Telegram-based “pump and dump” campaign targeting nine ASX stocks. For a scheme that netted them $85,000 collectively, they now face up to 15 years in prison and fines of up to $1 million.
The case, launched one day before ASIC publishes its Market Cleanliness review into the integrity of Australia’s public markets, is significant for a few different reasons.
