A quartet of amateur Australian stock-jockeys face jail under charges laid last week in what looms as a landmark case for social media-based financial crime.
Syed Yusuf, Larissa Quinlan, Emma Summer, and Kurt Stuart risk a maximum prison term of 15 years and fines up to A$1 million if found guilty of “conspiracy to commit market rigging and false trading, to artificially increase the price of Australian shares before dumping them”, according to a release.
Furthermore, the defendants have been charged with “dealing with the proceeds of crime” after pocketing unspecified profits from resulting share trades.
The criminal action follows an investigation by the Australian Securities and Investments Commission (ASIC) into alleged ‘pump-and-dump’ stock market manipulation engineered via messaging app, Telegram in 2021.
ASIC warned social media users at the time over “blatant” online market manipulation attempts amid a frenzy of retail share-trading activity on newly minted investment platforms.
The foursome now up before the courts are not guilty of subterfuge, at least, given their Telegram chat was named the ‘ASX Pump and Dump Group’.
Joe Longo, ASIC chair, said in the release: “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.”
Longo said the regulator “monitors the cleanliness of our markets, and we take decisive action to disrupt activities that may impact cleanliness”.
The statement says ASIC keeps a close eye on licensed trading markets through “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.”
Global regulators have been playing technological catch-up as financial fraud and market manipulation increasingly shift online.
But the International Organization of Securities Commissions (IOSCO) has been spearheading efforts to coordinate a regulatory crackdown on online financial crime across the world.
“By developing international standards, promoting information sharing, conducting research and analysis, and providing guidance and training, IOSCO has been able to enhance the effectiveness of market surveillance and help regulators detect and prevent manipulative activities,” a recent presentation notes.
Tax authorities are also making inroads into the online trading universe with technology and data-sharing agreements.
Last month, for instance, the Inland Revenue Department told online traders it had the “tools and the analytics capabilities to identify and expose cryptoasset activities”
“Data we have has helped us identify customers who are not paying their tax. That data is also now being used to identify customers with significant cryptoassets,” an IRD spokesperson said.