Australia’s financial regulator ASIC has announced that following an ASIC investigation, four people have been charged criminally for their alleged involvement in a coordinated scheme to pump shares into Australian share values before dumping them at inflated prices.
Syed Yusuf, Larissa Quinlan, Emma Summer and Kurt Stuart were charged at the Downing Center Local Court with conspiring to commit market rigging and false trading, to artificially inflate the price of Australian shares before dropping them.
They face a maximum sentence of 15 years in prison and a fine of more than $1 million for market manipulation.
ASIC alleges that in an organized enterprise the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce in the public Telegram group called the ‘ASX Pump and Dump Group’.
The defendants have also been charged with managing the proceeds of crime in relation to the money each obtained from the sale of the shares subject to the pump and dump business.
ASIC chairman Joe Longo said,
“Market manipulation is illegal. Pump and Dump schemes are a form of financial fraud, eroding investor wealth, threatening the integrity of our markets and potentially the wider Australian economy.
“Maintaining the integrity of Australia’s financial markets is a priority for ASIC.
“ASIC monitors the cleanliness of our markets and we take decisive action to disrupt activities that may affect cleanliness. This is why we have taken the action to enter social media forums and post direct warnings to members that their actions may be breaking the law. Concerted attempts to manipulate the market is a criminal offence.”
This matter is being prosecuted by the Commonwealth Director of Public Prosecutions following a referral by ASIC in December 2022.
The case was adjourned to 30 July 2024 at Downing Center Local Court for a remand application for each of the accused.
Record
ASIC monitors trading in Australia’s licensed markets through its sophisticated real-time surveillance system and by integrating trading data with third-party data to monitor pump and dump activity in Australian securities markets. This allows ASIC to see underlying customers, identify networks of related parties and analyze trading patterns.
Over a three-week period in September 2021, nine announcements were made to the ASX Pump and Dump Group to boost select stocks. The defendants allegedly purchased some or all of the shares with the intention of “pumping up” the share price to an artificial target and then selling them when the share price had risen significantly.
In October 2021, ASIC warned traders in a Telegram share market chat room that they may be breaking the law by seeking to organize share price manipulation.
Each of the defendants bought some, but not all, of the stocks they had conspired to announce to members of the ‘ASX Pump and Dump Group’.
The defendants are charged with handling the proceeds of crime in relation to the money they each obtained from the sale of the shares that are the subject of a pump and dump business under Penal Code section 400.4(1) and conspiracy to commit market fraud and false trading, under by s 11.5(1) of the Criminal Code (Cth) and s 1041B(1)(b) of the Corporations Act 2001 (Cth).