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SFC issues restriction notices to two brokers to freeze client accounts linked to suspected social media ramp-and-dump scam

Issue date: 2021-02-09 18:46:14

The Securities and Futures Commission (SFC) has issued restriction notices to Enlighten Securities Limited and Futu Securities International (Hong Kong) Limited, prohibiting them from dealing with or processing certain assets held in three trading accounts, which are related to a suspected social media ramp-and-dump scam involving the manipulation of the market in the shares of two companies listed on the Stock Exchange of Hong Kong Limited between March 2020 and October 2020 (Notes 1 & 2).

The restriction notices prohibit the two brokerage firms, without the SFC’s prior written consent, from disposing of or dealing with, or assisting, counselling or procuring another person to dispose of or deal with, any assets in any way in the trading accounts up to a certain amount, including: (i) entering into transactions in respect of any securities; (ii) processing any withdrawals or transfers of securities and/or cash or any transfers of money arising from the disposal of securities; and (iii) disposing of or dealing with any securities and/or cash on the instructions of any authorized person of the accounts or any person acting on their behalf.  The brokers are also required to notify the SFC if they receive any of these instructions.

The SFC considers that the issue of the restriction notices is desirable in the interest of the investing public or in the public interest.

The SFC’s investigation is continuing.

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Notes:

1. The SFC issued the restriction notices pursuant to sections 204 and 205 of the Securities and Futures Ordinance.
2. A social media ramp-and-dump scam is a form of stock market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then induce investors via social media platforms to purchase the shares they “dump” at an artificially high price.

Source: SFC