SINGAPORE: A cross-border syndicate suspected of running "pump-and-dump" scams on stocks listed on the Hong Kong Stock Exchange has become the target of a joint investigation by the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force (SPF).
A Singapore-based suspect was arrested and cash amounting to about S$4.4 million – suspected to be proceeds from the scam – was seized, authorities said on Thursday (Dec 16). The suspect also surrendered her passport.
The investigation is being coordinated with the Hong Kong Securities and Futures Commission and Hong Kong Police Force, which launched investigations in the city on the same day, said SPF and MAS.
"The simultaneous joint operation involving securities regulators and law enforcement agencies in Singapore and Hong Kong is the first-of-its-kind in tackling cross-border pump-and-dump scams," said the authorities in a news release.
A pump-and-dump scam involves artificially pumping up the price of a company's shares by buying them up and spreading false good news about the company on social media and messaging applications.
This induces unwary victims to buy the shares, explained SPF and MAS. When prices are sufficiently high, the syndicate then dumps the shares by selling them to victims.
"The victims are left holding stocks with plummeted value and end up suffering substantial losses while syndicate members profit from the scam," said authorities.
Such scams contravene Singapore's Securities and Futures Act, under which a person may be guilty of an offence occurring partly in Singapore even if the security is listed on an overseas market.
MAS and CAD continue to receive reports of victims falling prey to pump-and-dump scams, and will take firm action against those in Singapore who help to perpetrate them, said the authorities.
They advised members of the public to be wary of stock recommendations given on social media and messaging applications, and to exercise caution regarding discussions about coordinated trading activities on these applications.
In August, police warned of a resurgence in pump-and-dump scams, highlighting a case in which seven people lost more than S$1 million in 48 hours, after buying shares on the recommendation of a self-proclaimed expert.