The moderators of popular Australian stock market discussion board ASX_Bets have lashed out at “scum” investors pushing pump and dump schemes, after the Australian Securities & Investment Commission (ASIC) announced a “concerning trend” of market manipulation attempts appearing on social media.
In a Thursday note, ASIC said it is aware of “blatant” social media users coordinating to hype up target stocks, convince others to buy into those shares, and then liquidate their positions when prices rise past a certain target.
“If an investor decides to buy shares as part of one of these campaigns, they may become the victim,” ASIC said.
“The people behind the campaign may start dumping their shares and taking profits before they reach the target price.”
This form of market manipulation is illegal. If proven, orchestrating a pump and dump scheme could result in heavy fines and prison time for those responsible.
“We expect anyone involved in these campaigns to recognise the potential impact on market integrity and to be aware ASIC monitors all trading on the ASX equity market on a real time basis,” ASIC Commissioner Cathie Armour warned.
Social media forums dedicated to stock trading discussions have ballooned in influence over the past year, largely due to users of Reddit forum /r/WallStreetBets, collaborating on a landmark run on the shares of American video game retailer GameStop.
A third of all Australian retail traders now view social media as their primary information source, according to an April report from TradingView.
ASIC has warned first-time investors to be wary of advice gleaned on such forums.
The moderators of Reddit forum ASX_Bets, an irreverent online meeting place for retail traders and stock market speculators, have taken pains to distance the board from such pump and dump schemes.
“Stop it. Stop it now,” one moderator wrote of market manipulators last week.
“Get the fuck out of our [forum], get the fuck out of our community, get the fuck out of our planet.”
Responding to the Thursday ASIC notice, another moderator labelled market manipulators “scum”.
“This is exactly why we kill [pump and dumpers] when we find them,” they said on Friday, referring to the board’s established practice of banning users deemed to be participating in market manipulation.
Despite those choice words for some users lurking ASX_Bets, the board’s moderator team has indicated their belief the ASIC notice was primarily about private Telegram and Facebook groups explicitly focused on pump and dump schemes.
The Australian Financial Review has reported the existence of Telegram groups which allegedly build hype around companies with a low number of shares on issue in order to take advantage of artificially inflated prices.
“I assume this largely is about Telegram and some Facebook groups (a lot of Facebook groups were private a few months ago, but they aren’t hard to find if you’re in the asx stock communities) that pump,” one ASX_Bets moderator wrote of the ASIC statement.
After the GameStop phenomenon, moderators of the Australian forum announced they would take a hardline approach to users disguising pump and dump schemes as ‘short squeezes’.
“If a great crusade comes along, if someone kicks your dog or we find evidence of manipulation, we’ll grab our pickforks (sic) with you,” one moderator wrote at the time.
“But arranging a pump so someone else will hold your bags isn’t the same thing.”