Social media under ASIC’s watch

Investors using social media and chatrooms to conduct market manipulation are already coming under increased scrutiny from the Australian Securities and Investments Commission (ASIC).

Last month, ASIC warned it had noted a “concerning trend social media posts being used to coordinate ‘pump and dump’ activity in listed stocks” and that such market manipulation was illegal.

It has now been noted that ASIC was actively watching and even participating in these chats.

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Dale Gillham, chief analyst at Wealth Within, highlighted a specific Telegram chatroom which was being used to ‘pump and dump’ shares in listed company YPB.

Shares in this ASX-listed stock spiked dramatically and had subsequently traded erratically during the week commencing 8 October.

“What this organisation was not aware of or chose to ignore is that ASIC had been watching the share price movement of this stock for a few months. So much so, that ASIC posted on the Telegram chat forum that their participation in pumping and dumping stocks may be illegal activity that could result in fines of more than $1 million or even jail time,” Gillham said.

“What many involved in these chat forums, and indeed most investors don’t understand is that ASIC has sophisticated systems to monitor all trading including any suspicious trading.

“ASIC also knows who is behind every share bought and sold on the stock market and they have recently made it very clear that they are targeting these chat forums, as well social media finfluencers who talk about financial products including stocks.”

ASIC commissioner, Cathie Armour, said: “ASIC has been working closely with market operators to identify and disrupt pump and dump campaigns, and we will continue to target actions that threaten the integrity of markets and to take enforcement action where appropriate.

“We expect anyone involved in these campaigns to recognise the potential impact on market integrity and to be aware ASIC monitors all trading on the ASX equity market on a real time basis.”

She urged participants to be aware and notify the regulator if they observed groups of people trading in the same stock at the same time, opening accounts at the same time or transferring funds between themselves.

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