$1b frozen as investors hit by online stocks con

31-12-2020 00:00 HKT

Staff reporter

At least 60 securities accounts with more than HK$1 billion involved in an online stocks scam have been frozen by brokers since November, media reported, citing people in the securities industry who do not want to be named.

Some fraudsters set up investment groups on social media, such as WhatsApp and Telegram, suggesting investors buy small-cap firms to push up the share price.

A securities industry insider said many investors have asked to withdraw funds from the brokers involved in the scam since November but failed because the securities firms claimed police had issued a "disapproval notice" and frozen the accounts.

Police and the Securities and Futures Commission refused to comment on the cases.

Most of the securities firms involved are Chinese-funded securities firms, which all experienced significant changes in their positions before and after the Macau E&M (1408) share-price collapse, said the report.

The newly listed electrical and mechanical contractor plunged more than 80 percent on November 26 on turnover of HK$125 million after the stock was recommended by market watchers on social media.

The shares opened 15 percent lower on that day, then slumped as much as 88.3 percent to HK$0.51.

This came after it recorded a turnover of HK$79.68 million in five minutes before the stock market closed on November 25, at prices between HK$4.36 and HK$4.47.

It closed 81.88 percent lower at HK$0.79 on November 26.

Macau E&M was "strongly recommended" by some groups on social media apps WeChat and WhatsApp and the shares were billed as "WeChat shares" by market watchers.

The Macau-based company, which made its debut in September, saw its share rise from an initial public offering price of HK$1 to a peak of HK$5.50 in early November.

Among the retail shareholders on November 28, Kingkey Securities held 3.83 percent, down from 9.38 percent on November 25, the day before the stock price plummeted.

The stake of Zhongtai International Securities was lowered from 2.22 percent to 0 percent while ICBC (Asia) Securities' holdings dropped from 0.52 percent to 0.13 percent in four days, data from the Central Clearing and Settlement System showed.