Fake Investment Gurus Strike Again, Lure Victims Into Manipulated Trades, SFC Warns

The
Securities and Futures Commission (SFC) issued a warning today (Wednesday)
about ramp and dump schemes that target retail investors through instant
messaging apps and social platforms, where scammers build trust by
impersonating legitimate stock commentators before orchestrating coordinated
pump operations on thinly-traded shares.

Small-Cap Stocks Become
Target for Coordinated Manipulation

The fraud
follows a predictable pattern. Scammers reach out to potential victims on
social media, presenting themselves as reputable market experts with insider
knowledge.

They push
investment tips on small-cap or illiquid stocks, claiming to offer guaranteed
high returns. Once enough investors pile into the stock and drive up the price,
the fraudsters dump their holdings at inflated levels and disappear.

Victims
often find themselves stuck with worthless shares as prices collapse. In some
cases, the SFC says, investors were directed to fraudulent trading platforms or
apps where they later couldn’t withdraw their money.

Hong Kong
has been battling these schemes for years. The regulator charged 24
individuals in a major ramp-and-dump crackdown back in 2023, and froze client
accounts in 2021 over
similar suspected manipulation. The problem persists despite enforcement
efforts.

Recovery Scams Add Insult
to Injury

What makes
these schemes particularly cruel is the second wave of fraud that often
follows. After victims lose money in the initial manipulation, the same
fraudsters sometimes circle back with a different pitch. They claim
“compensation” can be arranged if the victim pays additional
“deposits” or “handling fees.” Once the money transfers,
the scammers cut off all contact.

The SFC
notes that victims rarely know who they’re actually dealing with.

“Most
of the time, investors do not know the true identities of the people who urge
them to buy the stock or the reliability of the information they provide,”
the regulator said. Fake social media profiles, counterfeit documents, and
impersonation of trusted commentators help build credibility.

This
pattern mirrors broader trends across global markets. Belgium’s FSMA reported a 44%
jump in fraud complaints in 2024, with half linked to crypto scams. The UK’s FCA said investment
scams hit 800,000 victims by late 2025, prompting new consumer protection tools.

Regulators Push SMS
Verification and Phishing Defenses

Hong Kong
has been working on technical fixes to combat the scam epidemic. The SFC pushed brokers
to adopt SMS verification schemes last year and banned certain
broker text links after
phishing attacks targeted traders.

The
regulator is now urging investors to be skeptical of offers that seem too good
to be true, especially from social media contacts. It specifically warned
against sending trading screenshots to online “friends” and stressed
that legitimate firms don’t ask for deposits into individual bank accounts.

The SFC
says it has reported the latest cases to Hong Kong Police and will continue
coordinating with law enforcement. Investors who spot suspicious activity can
report it through the SFC’s Alert List or the Police’s Anti-Deception
Coordination Centre.

Similar
manipulation schemes have triggered enforcement actions elsewhere. Australia’s
ASIC ramped up
pump-and-dump warnings in December 2025 after securing convictions against four
individuals, while the UK’s FCA has dealt with a wave of impersonation
scams targeting major brokers including XTB.

This article was written by Damian Chmiel at www.financemagnates.com.

Source link