The Hong Kong Securities and Futures Commission (SFC) in a join operation with the local police, has charged 13 suspects with various criminal offences in connection to a sophisticated ramp-and-dump syndicate.
Five of the defendants are charged with conspiracy to defraud and conspiracy to engage in a scheme aiming to defraud or deceive in transactions involving securities. Two of them face additional charges of money laundering along with eight others.
The “ramp-and-dump” scheme
According to today’s announcement by the Hong Kong regulator, the charges follow a joint investigation with the Police, while looking into a suspected “ramp-and-dump” stock investment schemes.
The SFC alleges that the syndicate members organised and executed the schemes in the shares of two Hong Kong-listed companies through different social media platforms. They manipulated the trading of a large volume of those shares by using a substantial number of nominee accounts.
The regulator stated:
In implementing the schemes, the syndicate members were alleged to have committed offences involving market manipulation and money laundering.
The SFC detailed that from October 2018 to May 2019, Tam Chung Wai (previously known as Tam Sze Chun), Tam Sze Leung, Kwok Wai Leung, Hui Ka Chun and Chan Kai Sun Joseph allegedly conspired to other individuals to use multiple nominee accounts to corner the shares of the target stocks and drive up the price of those shares.
Furthermore, the regulator alleges that at a later stage, the defendants introduced investors to buy those shares through different social media platforms. The scheme operators, then aggressively disposed of the shares at a profit and the price of the target stocks collapsed once the demand was exhausted.
