ASIC Warns Of ‘Pump And Dump’ Finance Scams
The corporate regulator has warned the new generation of Millennial and Generation Z investors could be targeted by a scam.
“We are seeing more pump and dump activity, sometimes called momentum trading, and we need to be really cognisant of that,” ASIC senior manager Somer Taylor told the MarketLit virtual conference on Friday.
The regulator defines “pump and dump” as a scam whereby criminals artificially inflate the price of a stock by promoting fake news or positive depictions of a company in order to increase trading and profit by later selling the inflated shares.
The warning comes as a Melbourner, Gabriel Govinda, faced 23 charges of market manipulation and 19 charges of illegal dissemination of information in Court.
ASIC described Govinda as a “lone ranger”, and potentially could attract a maximum penalty of 10 years’ jail and fine of up to $765,000.