Hong Kong's Securities and Futures Commission (SFC) on Friday issued notices of restriction to Emperor Securities Limited and Get Nice Securities Limited prohibiting them from handling or disposing of certain assets in 17 trading accounts linked to a suspected social media "Sing High Bulk" scam. This involved market manipulation activities in relation to the shares of a company listed on The Stock Exchange of Hong Kong Limited at the end of October 2021.
The SFC took search action following the issuance of the restraining notice.
The notice of restriction prohibits the two securities companies from disposing of or disposing of, or assisting, instigating or procuring, in any way, any disposition or disposition of any assets in such trading accounts by another person without the prior written consent of the SFC, including:
(i) entering into transactions in respect of any securities;
(ii) process any withdrawal or transfer of securities and/or cash at the direction of any authorised person in such account or any person acting on its behalf;
(iii) dispose of or dispose of any securities and/or cash at the direction of any authorised person in such account or any person acting on its behalf;
(iv) assist another person in the disposition or specified disposition of any property in question.
If the two securities companies receive any of the above instructions, they must also notify the SFC of Hong Kong.
In March 2021, the SFC issued a restraining notice to 15 brokers prohibiting them from trading or processing certain assets held in 32 trading accounts. The accounts are linked to social media hype and dumping scams suspected of manipulating the stock markets of listed companies on The Stock Exchange of Hong Kong Limited between November 2019 and November 2020.
这15家经纪商商分别是：Canfield Securities Company Limited、China Galaxy International Securities (Hong Kong) Co., Limited、China Tonghai Securities Limited、Emperor Securities Limited、Enlighten Securities Limited、Enlighten Securities Limited、Futu Securities International (Hong Kong) Limited、Huatai Financial Holdings (Hong Kong) Limited、I Win Securities Limited、KGI Asia Limited、Riches Depot Securities Co., Limited、Solomon Securities Limited、Sun Hung Kai Investment Services Limited、Sun International Securities Limited及Yuzhou Financial Holdings Limited。
Last month, the Hong Kong Securities and Futures Commission announced a reprimand and fine of $5.5 million against Ample Capital Limited (ACL). In addition, the authorities fined Ample Capital Limited for failing to perform its duties as a sponsor in cocci International Limited (COCCI)'s listing application between 2016 and 2017.
Scammers try to exploit fear
The SFC said the situation of financial fraud is changing as more and more people become targeted for online attacks, rather than traditional phone scams. Fraudsters now connect with people through a range of popular social media sites such as Facebook, Instagram, WeChat, Whatsapp, Telegram, and even online dating platforms.
In addition, regulators have urged investors to be vigilant when offering "inside information" or investment tips online, especially when strangers advertise small-cap stocks or less liquid stocks on social media. In addition, it also revealed that more and more Hong Kong small-cap companies have been attacked by the "sing high bulk" scam this year.
According to the SFC, 20 percent of the market manipulation cases currently under investigation fall under such fraudulent schemes that seek to raise or lower stock prices through recommendations based on false or misleading prompts.
The perpetrators of the so-called "singing high bulk scam" are now focusing on social media channels and employing increasingly sophisticated tactics to persuade victims to join. The SFC said it sometimes impersonated well-known investment advisers and popular market commentators to attract victims to the scheme.
While there are many variations in these strategies, regulators say some promotions use so-called research reports and forecast specific target prices for the company's stock.
Note: The social media "sing high bulk" scam is one of the ways to manipulate the stock market. Scammers use different methods to artificially push up the stock price of a listed company, and then induce investors to buy the stock sold by the scammer at a high price through different social media platforms.