Hong Kong SFC Charges 13 Individuals for Ramp-and-Dump Scheme Targeting 2 HK Stocks, Used Social Media, Laundered Money & Manipulated Share Trading Volume Through Nominee Accounts
6th October 2022 | Hong Kong
The Hong Kong Securities & Futures Commission (SFC) has charged 13 individuals with criminal offences for operating ramp-and-dump scheme. Hong Kong SFC: “Between October 2018 and May 2019, Mr Tam Chung Wai (previously known as Tam Sze Chun), Mr Tam Sze Leung, Mr Kwok Wai Leung, Mr Hui Ka Chun and Mr Chan Kai Sun Joseph were alleged to have conspired with a number of individuals to use multiple nominee accounts to corner the shares of the target stocks and drive up the price of those shares. At a later stage, the syndicate was alleged to induce investors to purchase those shares through different social media platforms. The syndicate then disposed of their shares aggressively at a profit and the price of the target stocks collapsed once the demand was exhausted.” See below for Hong Kong SFC statement.
“ Hong Kong SFC Charges 13 People for Ramp-and-Dump Scheme Targeting 2 HK Stocks, Used Social Media, Laundered Money & Manipulated Share Trading Volume Through Nominee Accounts “
Ramp-and-dump scheme is a form of market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then “dump” the shares to other investors at an artificially high price. The fraudsters also used social media platforms to lure the unsuspecting investors to buy the shares at an artificially high price while the syndicate members were offloading for profit leaving innocent victims with substantial losses.
Hong Kong SFC statement
Thirteen people charged following SFC and Police joint operation against ramp-and-dump syndicate
HK SFC: Thirteen suspects were charged with various criminal offences following an earlier joint operation of the Securities and Futures Commission (SFC) and the Police against a sophisticated ramp-and-dump syndicate (Note 1).
Five of them were charged with the offences of conspiracy to defraud and conspiracy to employ a scheme with intent to defraud or deceive in transactions involving securities under common law, section 300 of the Securities and Futures Ordinance (SFO) and section 159A and 159C of the Crimes Ordinance. Among them, two face additional charges of money laundering together with eight other defendants.
Twelve suspects appeared at the Eastern Magistracy today. No plea was taken and the case was adjourned to 17 April 2023.
The charges stemmed from a joint investigation by the SFC and the Police on suspected “ramp-and-dump” stock investment schemes. The alleged syndicate members organised and executed “ramp-and-dump” schemes in the shares of two Hong Kong-listed companies (target stocks) by using different social media platforms and manipulated the trading of a large volume of those shares through the use of a substantial number of nominee accounts. In implementing the schemes, the syndicate members were alleged to have committed offences involving market manipulation and money laundering (Note 2).
Between October 2018 and May 2019, Mr Tam Chung Wai (previously known as Tam Sze Chun), Mr Tam Sze Leung, Mr Kwok Wai Leung, Mr Hui Ka Chun and Mr Chan Kai Sun Joseph were alleged to have conspired with a number of individuals to use multiple nominee accounts to corner the shares of the target stocks and drive up the price of those shares. At a later stage, the syndicate was alleged to induce investors to purchase those shares through different social media platforms. The syndicate then disposed of their shares aggressively at a profit and the price of the target stocks collapsed once the demand was exhausted.
The Court granted bail to the 12 defendants on these conditions: (i) not to leave Hong Kong; (ii) surrender all travel documents; (iii) report to police station on regular basis; and (iv) cash bail ranging from $50,000 to $1 million.
Notes:
- Following a lengthy and significant investigation, the SFC has referred the case to the Department of Justice which has the authority to prosecute offences under the SFO and other offences in all levels of the courts in Hong Kong. The maximum penalty on conviction upon indictment for the offence of conspiracy to defraud is 14 years imprisonment while the maximum penalty for market misconduct offences under the SFO is imprisonment of 10 years and a fine of $10 million.
- Ramp-and-dump scheme is a form of market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then “dump” the shares to other investors at an artificially high price. The fraudsters also used social media platforms to lure the unsuspecting investors to buy the shares at an artificially high price while the syndicate members were offloading for profit leaving innocent victims with substantial losses. Please also see the SFC’s press release dated 5 March 2021.
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