HK police, stock regulator freeze HK$900 million, arrest 12 in joint crackdown on ‘ramp and dump’ investment scam

06-Mar-2021 Intellasia | South China Morning Post | 6:49 AM Print This Post

More than HK$900 million (US$116 million) in suspected crime proceeds has been frozen in an unprecedented joint crackdown by Hong Kong police and stock regulators against so-called “ramp and dump” online investment scams, the Post has learned.

Twelve Hongkongers seven men and five women were arrested over the past two days on suspicion of fraud tied to money laundering during raids on 27 locations conducted by more than 160 law enforcers and staff from the Securities and Futures Commission (SFC).

“During the operation, the SFC and police have frozen accounts from securities firms and banks and seized a large amount of cash, along with valuables. The total amount involved is more than HK$900 million,” a government source said.

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The source said he believed a fraud syndicate was behind the scam and had targeted investment groups on social media platforms, claiming they could offer stock tips or inside information.

Most of the time, investors were unaware of the true identities of the people who lured them into the trap, according to the scam alert issued by police. In some cases, well-known investment advisers and market commentators have been impersonated.

“Fraudsters ramped up the price of a stock, then used social media to lure investors to buy at a high price. They then sold the stock to make profit,” he said.

He said initial investigation showed the syndicate had used more than a dozen stocks to lure investors.

This marks the first-ever joint operation between the SFC and police, according to sources.

Sources familiar with the operation said the stocks in question involved listed companies on the Hong Kong stock exchange, but it did not involve Next Digital.

Share trading in the media firm, founded by Jimmy Lai Chee-ying, was the subject of a police investigation in September that saw 15 people arrested on suspicion of conspiracy to defraud and money laundering through manipulation of shares.

Under the Securities and Futures Ordinance, those found guilty of engaging in manipulative stock market activities or transactions face maximum penalties of 10 years in prison, and a fine of up to HK$10 million.

From January to October of last year, police received 379 reports of online investment frauds involving HK$196.3 million. This was more than double the 167 cases, and more than four times the HK$48.6 million in losses, reported in 2019.


Category: Hong Kong

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