ASIC reveals 14 shares subject to Telegram pump and dump scheme

Sarah Danckert

ASIC has unveiled 14 shares that were subject to a Telegram pump-and-dump scheme earlier this year
ASIC has unveiled 14 shares that were subject to a Telegram pump-and-dump scheme earlier this year. Photo: Getty Images
  • The shares were named in response to a question asked during a Seante hearing in November.
  • Among the shares affected were Marquee Resources, TTA Holdings and Albion Resources.
  • ASIC only started targeting the groups in October when it started going into chats and warning users that they were being monitored.
  • Visit Business Insider Australia’s website for more stories.

The company’s watchdog has listed the 14 stocks that this year were the toy of a social media group that worked to illegally drive stock prices up before transferring the stock to unsuspecting investors in a “pump and dump” scheme.

For six weeks, the chat group on the telegram messaging platform created chaos on ASX before evaporating under pressure from the Australian Securities and Investments Commission. It is not clear if the group has shut down completely or just moved to a platform that is harder to find.

ASIC named the shares in its response to questions following announcement by ALP Senator Deborah O’Neill at a Senate hearing in November following an increase in day trading among younger investors and the growing use of pump and dump groups by junk traders in 2021.

“Pump and dump” schemes involve coordinated action by groups of investors to push the value of a stock up before dumping the stocks en masse for a profit.

This can be achieved by a barrage of positive posts to encourage investors on social media platforms like Twitter, Facebook, Reddit and Telegram. In some cases, the behavior has been more explicit, with a Telegram group – ASX Pump and Dump – planning pumps and landfills.

Aging and Sydney Morning Herald revealed this year that the company’s watchdog had joined “pump and dump” chat groups on messaging apps like Telegram to warn day traders that they could risk heavy fines or even jail time for participating in the illegal trading schemes.

ASIC’s list of pump and dump targets included the online training publisher Kneomedia, which targeted pumps on August 10 and 11, base metal researcher Kuniko, which pumped 370% during trading on August 26 but closed only 183% higher, and Locksley Resources , which on September 16 was pumped 47.50% during a trading session before a divestiture led to its shares closing 10% lower.

Screenshots of the Telegram pump and dump group for September 16 show how the group actively worked to push Locksley’s shares up: “Pump target: Break 100% ++ or 0.45 BUY NOW and SEND IT TO THE MOON. BUY ON MARKET OFFERS to avoid being left behind. ”

The other companies listed by ASIC were Marquee Resources, TTA Holdings, Albion Resources, Aruma Resources, Australasian Metals, Ozz Resources, Tempest Minerals, Culpeo Minerals, Jayex Technology, Western Gold Resources and Aura Energy.

A post in the Telegram group even outlined how they chose their goals. “Categories of Pumped Shares: Prefer $ 10 Million MC (market value) or less; Low SOI (shares at issue), Top20 (shareholders) have large%; bullish chart; preferably have a price-sensitive message to avoid a quick stop to trading, ”it explained.

The ASIC told the Senate committee that it had entered into agreements with platform providers to eradicate these groups. It also admitted that it was difficult to eradicate this activity completely.

“Given the highly fragmented nature of social media platforms and the widespread use of encrypted and private chat channels, it is challenging for ASIC to systematically monitor all activity that may be associated with potential market abuse,” ASIC said in its letter to the committee.

This story first appeared in The Sydney Morning Herald. Read it here or follow the Australian Financial Review Australia on Facebook.

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