SC warns investors over ‘pump and dump’ schemes

PETALING JAYA: The Securities Commission (SC) is warning investors over the increased use of blogs, forums and social media platforms to spread false and misleading information on certain companies in order to perpetrate “pump and dump” schemes.

The SC and Bursa Malaysia have identified a blog Bonescythe Stock Watch, which was found to have published various articles that con- tain misleading and deceptive statements and forecasts.

This is an offence under Section 178 of the Capital Markets and Services Act 2007 (CMSA), and the blog has since been removed following the SC intervention.

“Pump and dump” schemes that occur via social media begin with perpetrators accumulating shares at low prices before posting positive sentiments about the companies, with the intention to spur interest in the shares to drive up its price.

When unsuspecting investors buy the shares, it gives the perpetrators an opportunity to sell their shares at a profit.

Investors who bought the shares at the inflated price will suffer losses when the hype eases.

The SC advises investors to always exercise diligence and verify the legitimacy of the information before making an investment decision. Investors are reminded to be cautious of the risk of fraud and when in doubt, to seek advice from persons who have been licensed by the SC. Investors may refer to the SC website for warnings and alerts, and more information about investing and investor education can be found on the InvestSmart website and InvestSmart Facebook page.