Social media exploited for 'pump and dump' activities: SGX RegCo

Singapore

SINGAPORE Exchange Regulation (SGX RegCo) has flagged possible market misconduct activities which make use of Telegram chat groups and other social media channels to engage in "pump and dump" schemes.

In a release on Thursday, the regulator highlighted that platforms such as Telegram, where strategies on investment are exchanged, can be a useful way for investors to share knowledge and information.

"We are, however, aware of instances where wrongdoers may misuse these channels," it said. "The wrongdoers do so by engaging in 'pump and dump' schemes where they would promote interest in a particular security for their own benefit."

This could include people either working alone or in a group to encourage other members in the chat group to trade a particular security.

As more members in the group do so, the share price goes up.

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The wrongdoers would then sell the shares which they had bought earlier - typically in a low-volume, low-price security - at a profit.

SGX RegCo warned the public that information on investments and trades shared on social media, especially by anonymous individuals, may not be credible.

"Investors should always conduct their own due diligence and research on any potential investments," SGX RegCo said, adding that it will refer potential wrongdoers to the statutory authorities for investigation of breaches of the laws.