The Australian Securities and Investments Commission (ASIC) has taken the fight against market manipulation to the front lines by infiltrating an unlawful pump and dump investing group.
In the age of millennial investing, many individuals have banded together to create secret groups to artificially inflate the prices of different stocks and cryptocurrencies. This has made it incredibly difficult for ASIC and the Australian Taxation Office (ATO) to monitor the flow of assets and money. After taking a reactive approach, ASIC flipped the script and gained entry into a trading group hosting 300 small investors. The group operated through Telegram, an encrypted messaging platform, popular amongst traders around the world. Normally these groups are highly secure with real administrators preventing bot spam and unwanted guests, but by divine intervention, an ASIC representative had been added to the group. According to ASIC, the group had detailed listings of targeted Australian stocks that were going to be “illegally pumped” when the markets next opened.
Once inside, the ASIC representative sent an alarming message, warning members that coordinating buy pressure in equities markets is against the law. Such market manipulation contravenes the Corporations Act 2001 (Cth) and may include criminal charges as well as fines upwards of $1M. Many members took this message as a hoax and collectively pumped a NSW stock regardless of ASIC’s message.
Technology has now opened up a new avenue for anonymous individuals to work together and manipulate global markets. As such, ASIC has taken a stance to monitor these smaller players rather than target real insider trading. However, this poses a question as to the efficacy of online privacy. If ASIC is taking the time to monitor and breach an encrypted platform, how else are other regulatory bodies watching our moves online?