The Singapore Police Force’s (SPF) Commercial Affairs Department (CAD) is conducting a joint investigation with the Monetary Authority of Singapore (MAS) into a cross-border syndicate. The reason for the investigation is suspicion of ‘pump-and-dump’ scams being conducted on stocks that were listed on the Hong Kong Stock Exchange. A suspect based in Singapore was arrested and was found to be in possession of cash worth S$4.4 million that was seized on December 16th, Thursday. Authorities suspect that these were proceeds from the scam, due to which the suspect had to surrender her passport as well.
The MAS and SPF disclosed that this investigation into the stock-buying scam syndicate is being coordinated with the Hong Kong Police Force and the Hong Kong Securities and Futures Commission. The two organizations had also launched the investigations on the same day in the city. In a news release, the authorities said that the simultaneous joint operating being conducted by law enforcement agencies and regulatory authorities in Hong Kong and Singapore is the first of its kind to be done in dealing with such cross-border pump-and-dump schemes. Typically, a pump and dump scam involves pumping up the price of a particular stock artificially by purchasing them and using messaging apps and social media platforms for spreading the false good news about the company in question.
Unwary victims are pushed into buying the shares because of these rumors. The MAS and SPF said that once the prices have gotten high enough, the syndicate then dumps the shares they have bought by selling them to victims. Authorities said that at the end of the day, the victims find themselves holding shares that have already fallen in value due to which they suffer significant losses, whereas the members of the syndicate are able to make profits from the scam.
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These scams are against the Securities and Futures Act of Singapore. This states that a person can be declared guilty of an offense occurring in Singapore partly, even if the listing of the security is in an overseas market. CAD and MAS are continuously getting reports of victims who have fallen into the trap of these pump-and-dump schemes. The authorities said that they will take quick action against all those who help in perpetuating these scams in Singapore. Members of the public have been advised by the authorities to be wary of any stock recommendations they come across on messaging applications or social media platforms.
They have also been told to exercise caution when it comes to discussions about coordinating trading activities on these platforms and apps. The police had issued a warning in August of a surge in these pump-and-dump scams. They had discussed a particular case in which nearly seven people had ended up losing more than S$1 million within a duration of 48 hours. All of this had happened because they had listed to a self-proclaimed expert and bought shares on his recommendation. This is how these scams perpetuate and people need to be cautious if they want to avoid them.
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