Following on from ASX’s careful eye on ramping announcements this year, ASIC has warned against ‘pump and dump’ campaigns on social media. Such activity is illegal and can constitute market manipulation in breach of the Corporations Act 2001 (Cth) attracting fines over $1 million and up to 15 years imprisonment.

Whilst ASIC has a sophisticated surveillance system to monitor all trades and patterns, market participants also have a role to play in preventing market manipulation and misconduct by submitting suspicious activity reports to ASX and ASIC. In addition to insider trading, any activity or trade that creates or maintains an artificial price or a false or misleading appearance in the market needs to be reported. It is therefore important for listed companies to ensure all staff are properly trained to identify any indicators of manipulative trading such as:

• unusual or unexpected trading activity;
• trading ahead of a price-sensitive announcement;
• transactions that make no economic sense;
• instructions to place an order immediately or urgently; and
• orders inconsistent with previous behaviour or profile.

In addition, investors and consumers are also encouraged to report misconduct to ASIC.

Market integrity is a key concern for the regulators and it is clear that any form of manipulation, whether it be through social media ‘pump and dump’ campaigns or ramping announcements designed to increase share prices rather than inform the market, will not be tolerated.

Clients requiring further advice on any of the issues raised in this article and continuous disclosure compliance are encouraged to contact us in our Perth and Melbourne offices.