The report, Equity market cleanliness snapshot report 786 July 2024, found Australian markets are among the cleanest in the world, which is measured by the number of anomalous accounts or volume divided by the total number of accounts or volume.
A clean equity market is one that is fair, orderly and transparent, which is critical to an efficient economy and that avoids share price run-ups before material information is released publicly.
In examining the five years to 30 April 2024, the report found two periods of temporary deterioration in market cleanliness: first, during the COVID-19 pandemic when global markets experienced high market volatility and trading, and again in late 2023, as corporate activity increased.
Recent regulatory interventions by ASIC included targeting pump and dump activity, intervening on chat rooms, reviewing “finfluencer” activity, and undertaking targeted reviews where it observed leaks ahead of market announcements.
Last week, four individuals were charged relating to pump and dump activity and could face a penalty of $1 million. The defendants allegedly formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the “ASX Pump and Dump Group”.
It is understood the defendants allegedly purchased some or all of the stocks with the intention to pump the share price to an artificial target and then sell them once the price of the stock had substantially increased.
Last year, finfluencer Tyson Scholz received a permanent injunction from the Federal Court to prohibit him from carrying on a financial services business. Scholz had been found guilty of carrying on a financial services business in Australia between March 2020 and November 2021 without an Australian financial services licence.
His business to paying subscribers included:
- Subscription/membership fees of $500, $1,000 or $1,500.
- Offers of various levels of share trading training, referred to as Stage 1, Stage 2 and Stage 3, which were marketed as introductory to advanced.
- The Stage 2 package provided one year’s access to a private chat site, named Black Wolf Pit, using the online communications platform Discord.
ASIC also almost doubled the number of new insider trading investigations commenced over the previous financial year. Six insider trading criminal prosecutions were before the courts, it said, and multiple insider trading matters were under active investigation or referred to the Commonwealth Director of Public Prosecutions (CDPP) for assessment.
ASIC chair Joe Longo said: “Clean financial markets are essential for the financial wellbeing of Australians and fundamental to an efficient economy. They enable businesses to raise capital and manage risk and give investors confidence to invest.
“Protecting and enhancing the integrity of Australia’s equity markets continues to be a priority focus for ASIC.”
