The Securities and Futures Commission has recently concluded an online campaign alerting the public about the use of online platforms to defraud investors.
A common form of share investment scam is the ramp-and-dump scam. A ramp-and-dump scam is a form of stock market manipulation whereby the fraudsters would use different means to “ramp” up the share price of a listed company and lure investors to buy shares at an artificially high price. The fraudsters would “dump” the shares to other investors for a profit. Such schemes can result in the collapse of a listed company’s share price.
Other forms of investment scam may even involve investments in shares of a non-existent company or IPO.
To induce unsuspecting investors to invest in the shares, fraudsters or their accomplices typically work patiently to establish a relationship of trust through frequent contacts and communication on social media, telephone calls and/or email. Once the trust is in place, the fraudsters may claim that they have inside information about shares in a company and use the promise of guaranteed profit to induce the investors to part with their money. In certain cases, fraudsters may impersonate well-known investment advisors or claim to be a licensed or registered corporation to instil confidence in the investors. Some fraudsters may also set up…