The corporate watchdog has ramped up its efforts to disrupt...

The corporate watchdog has ramped up its efforts to disrupt sharemarket manipulation by joining a social media group to warn its members that “co-ordinated pumping of shares” is illegal.In an unprecedented step, the Australian Securities & Investments Commission entered the Telegram group “ASX Pump Organisation”– a group with more than 300 members – warning just before Monday’s sharemarket open that “We can see all trades and have access to trader identities.“We’re monitoring this platform and we may be investigating you,” ASIC wrote at 9.32am.“You run the risk of a criminal record, including fines of more than $1m and prison time by being involved.”At 9.43am, the group’s moderator responded: “Any downrampers/spammers against our pump actions and goals will be muted or banned from the group.”“It was fake ASIC,” a member wrote.“This has clearly been sent by someone from another Telegram group trying to spook people here. ASIC don’t send messages like this.”Then at 9.54am, the moderator announced: “The stock we are going to pump is YPB Group,” a product authentication and consumer engagement solutions provider, with a tiny market capitalisation of $25m but almost five billion shares on issue.By 10.16am, YPB’s share price had jumped 50 per cent to a 13- month high of $0.006.But despite widespread scepticism, an ASIC spokesman confirmed that its post was genuine.“As has been foreshadowed, ASIC has been concerned at the increasing amount of so-called ‘pump and dump’ activity, which is driven on a number of social media platforms and which will ultimately prey on the vulnerable and the gullible who participate,” the ASIC spokesman said.“ASIC monitors these platforms and markets in real-time and will intervene to alert those involved they may be in breach of the law.”The ASIC move came after Redditt board users famously boosted the share price of US companies including GameStop AMC Entertainment earlier this year, causing major losses for at least one high-profile US hedge fund and prompting an inquiry by the Securities Exchange Commission.Hedge fund Melvin Capital Management bore the brunt of losses from the soaring stock prices of heavily shorted stocks including GameStop, and lost 53 per cent on its investments in January. ASIC has long monitored social media platforms and chat forums for trading-related activity, but has this year prepared for the recent trend in the US to manifest itself locally.In a media release on September 23, ASIC noted a concerning trend of social media posts being used to co-ordinate “pump and dump” activity in listed stocks, which may amount to market manipulation in breach of the Corporations Act of 2001.“Pump and dump activity occurs when a person buys shares in a company and starts an organised program to seek to increase (or ‘pump’) the share price,” ASIC said.“They do this by using social media and online forums to create a sense of excitement in a stock or spread false news about the company’s prospects.“They then sell (or ‘dump’) their shares and take a profit, and other shareholders suffer as the share price falls.”ASIC has recently observed blatant attempts to pump share prices, using posts on social media to announce a target stock, a designated time to buy and a target price or percentage gain to be reached before dumping the shares. “Market manipulation is illegal.“It can attract a fine of over $1m and up to 15 years imprisonment.ASIC takes breaches of the market manipulation provisions seriously,” the regulator said.Commissioner Cathie Armour said ASIC had been working closely with market operators to identify and disrupt pump and dump campaigns, and we will continue to target actions that threaten the integrity of markets and to take enforcement action where appropriate.“We expect anyone involved in these campaigns to recognise the potential impact on market integrity and to be aware ASIC monitors all trading on the ASX equity market on a real time basis,” she said.ASIC monitors trading on Australian licensed markets through its sophisticated realtime surveillance system and by integrating trade data with data from third parties, enabling it to see the underlying clients, identify networks of connected parties and analyse trading patterns.“Market participants, as gatekeepers, should take active steps to identify and stop potential market misconduct,” Ms Armour said.