ASIC delivers shock warning to traders on “pump and dump” Telegram chat group

As reported in the Australian Financial Review, in an extraordinary move from the corporate cop, ASIC yesterday entered a chat group on an instant messaging platform, Telegram, and warned participants that they may be breaking the law.

ASIC’s stern warning was as follows:

(Credit: Australian Financial Review).

Perhaps in hindsight, ASIC’s action should not be too surprising.  

In a media release 3 weeks earlier, the regulator warned of the concerning trend of social media posts being used to coordinate ‘pump and dump’ activity in listed stocks, which may amount to market manipulation in breach of the Corporations Act 2001.  

In a cryptically prophetic statement, ASIC Commissioner Cathie Armour said at the time that ASIC “has 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…”.  

ASIC’s stark warning was met with incredulity from some group members.  One said that the post was “from another telegram group trying to spook people here.  ASIC don’t send messages like this” with another claiming it was “fake ASIC”.  

However, an ASIC spokesman confirmed the Telegram warning was genuine, saying it monitors these platforms and markets in real time, and will intervene to warn people that they may be breaking the law.

Is ASIC’s foray into such social media a one-off, or a sign of the times and a signal of more to come?  Only time will tell.

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