SFC issues restriction notices to 13 brokers to freeze client accounts linked to suspected social media ramp-and-dump scam

NEWS
Published
Feb 18th '21
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The Securities and Futures Commission (SFC) has issued restriction notices to 13 brokers, prohibiting them from dealing with or processing certain assets held in 54 trading accounts, which are related to a suspected social media ramp-and-dump scam involving the manipulation of the market in the shares of a company listed on The Stock Exchange of Hong Kong Limited between September 2020 and November 2020 [1 & 2].

 

The 13 brokerages are: Celestial Securities Limited, Central China International Securities Co., Limited, China Industrial Securities International Brokerage Limited, China Tonghai Securities Limited, Core Pacific – Yamaichi International (H.K.) Limited, KGI Asia Limited, Kingkey Securities Group Limited, Luk Fook Securities (HK) Limited, Monmonkey Group Securities Limited, Shanxi Securities International Limited, Zeus Securities Limited, Zhongtai International Securities Limited and Zinvest Global Limited.

 

The restriction notices prohibit them, without the SFC’s prior written consent, from disposing of or dealing with, or assisting, counselling or procuring another person to dispose of or deal with, any assets in any way in the trading accounts up to certain amounts, including: (i) entering into transactions in respect of any securities; (ii) processing any withdrawals or transfers of securities and/or cash on the instructions of any authorized person of the trading accounts or by any person acting on their behalf; (iii) disposing of or dealing with any securities and/or cash on the instructions of any authorized person of the trading accounts or by any person acting on their behalf; and (iv) assisting another person to dispose of or deal with any relevant property in a specified manner.  They are also required to notify the SFC if they receive any of these instructions.

 

The SFC considers that the issuance of the restriction notices is desirable in the interest of the investing public or in the public interest.

 

The SFC’s investigation is continuing.

 

Source: SFC

 

Background

  1. The SFC issued the restriction notices pursuant to sections 204 and 205 of the Securities and Futures Ordinance.
  2. A social media ramp-and-dump scam is a form of stock market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then induce investors via social media platforms to purchase the shares they “dump” at an artificially high price.