Four face jail time over ‘pump and dump’ scam on messaging app

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This is a great typology for both  market manipulation (predatory offence) and money laundering.

Four people face jail time after being criminally charged with operating a “pump and dump” scheme on encrypted messaging app Telegram.

“Pump and dump” schemes involve co-ordinated moves by groups of investors to push up the value of a stock higher before dumping the shares en masse for a profit.

Syed Yusuf, Larissa Quinlan**, Emma Summer and Kurt Stuart were charged in Sydney’s Downing Centre Local Court with conspiracy to commit market rigging and false trading to artificially increase the price of shares listed on the Australian Securities Exchange (ASX) before dumping them.

If found guilty, they face a maximum penalty of 15 years’ imprisonment and a fine of over $1 million for market manipulation.

ASIC alleges that in an organised operation the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the ‘ASX Pump and Dump Group.’

The defendants have also been charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity.

ASIC Chair 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 Australian economy more broadly.

‘Upholding 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 impact cleanliness. This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law. Coordinated attempts to manipulate the market is a criminal offence.’

This matter is being prosecuted by the Commonwealth Director of Public Prosecutions after a referral from ASIC in December 2022.

The matter was adjourned to 30 July 2024 in the Downing Centre Local Court for a detention application to be made in respect of each of the defendants.

Background 
ASIC monitors trading on Australian licensed markets through its sophisticated real-time surveillance system and by integrating trade data with data from third parties to monitor pump and dump activity in Australian securities markets. This enables ASIC to see underlying clients, to identify networks of connected parties and to analyse trading patterns.

Over three weeks in September 2021, nine announcements were made to the ‘ASX Pump and Dump Group’ to boost the selected stocks. The defendants allegedly purchased some or all of the stocks with the intention to ‘pump’ the share price to an artificial target and then sell them once the price of the stock had substantially increased.

In October 2021, ASIC warned traders in a Telegram share market chat room they may be breaking the law by seeking to organise stock price manipulation (21-256MR).  

Each of the defendants purchased some, but not all, of the stocks that they had conspired to announce to the members of the ‘ASX Pump and Dump Group’. 

The defendants are charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity pursuant to s 400.4(1) of the Criminal Code, and conspiracy to commit market rigging and false trading, pursuant to s 11.5(1) of the Criminal Code (Cth) and s 1041B(1)(b) of the Corporations Act 2001 (Cth).

** Larissa Quinlan was charged with dealing in proceeds of crime – money or other property over $10,000 pursuant to section 400.6(1) of the Criminal Code Act 1995 (Cth). Syed Yusuf, Emma Summer, and Kurt Stuart were charged with section 400.4(1) of the Criminal Code Act 1995 (Cth).

Source: ​https://asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-161mr-charges-laid-in-alleged-telegram-pump-and-dump-conspiracy-following-asic-investigation/