The public need to stay cautious on the ramp and dump schemes, following several reported cases recently, said the Securities and Futures Commission on Wednesday.
The SFC said that investors should remain vigilant against investment scams involving fraudsters impersonating well-known stock commentators claiming to offer investment advice that guarantee high returns.
The regulator indicated that it has received multiple reports of scammers luring victims through social media platforms and instant messaging apps to participate in ramp and dump schemes.
In a typical ramp and dump scam, fraudsters aggressively promote small-cap or less liquid stocks, posing as reputable market experts. They may provide so-called inside information or investment tips, encouraging investors to purchase shares at artificially inflated prices, according to the SFC.
Once the price has increased, the fraudsters quickly dump their holdings, selling at a profit and leaving victim investors exposed to significant losses as the share price collapses.
Besides, there are also cases where victims were lured into trading on fraudulent platforms or apps, on which investors reported difficulties with asset withdrawal.
The SFC mentioned that most of the time, investors do not know the true identities of the people who urge them to buy the stock or the reliability of the information they provide. Scammers may use fake social media profiles, counterfeit documents, or impersonate trusted commentators to gain credibility.
