The Securities and Futures Commission (SFC) today introduced an official Facebook page with a campaign to warn the public about the increasing use of social media platforms to defraud investors.
The SFC explains how online investment scams operate and provides tips for avoiding them in the latest edition of its Enforcement Reporter, published today.
Investors are urged to be wary when offered “inside information” or investment tips online, particularly when strangers on social media promote small cap or less liquid stocks. These scams are often part of ramp and dump schemes (Note 1) which can result in the collapse of a listed company’s share price. In some cases, scammers have impersonated well-known investment advisors and popular market commentators to draw victims into the scheme.
“Cracking down on organised investment fraud on online platforms is a high priority,” said Mr Ashley Alder, the SFC’s Chief Executive Officer. “To avoid falling victim to these scams, the public must be vigilant when offered unsolicited investment advice or tips on social media.”
Practical guidance for how to identify the warning signs of internet scams is also available from the Investor Financial Education Council, a subsidiary of the SFC.
The official SFC Facebook page, launched today, will feature the latest news and regulatory updates from the SFC, including investor warnings about market risks, unlicensed activity and other illegal conduct. Information of interest to the financial industry and other professionals is posted on the SFC’s LinkedIn page.
- A ramp and dump scam is a form of stock market manipulation, where fraudsters “ramp” up the price of a small counter, lure investors to buy at an artificially high price and then “dump”, ie, sell, the stock. Most of the time, investors do not know the true identities of the people who urge them to buy the stock or the reliability of the information they provide.