Pump-and-Dump Scammers Put Global Regulators on High Alert Ahead of Holiday Trading Surge
Financial regulators across Australia, Europe and the United States are warning retail investors to remain on high alert as so-called “pump and dump” schemes surge ahead of the holiday trading period, driven by increasingly sophisticated criminal networks and the viral reach of social media.
Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), says it has recorded a sharp increase in reports linked to coordinated market manipulation campaigns targeting small-cap securities, including overseas-listed stocks marketed to Australian investors.
The renewed warning comes as four individuals involved in a coordinated Australian pump-and-dump operation were sentenced in Sydney, underscoring regulators’ growing willingness to pursue criminal enforcement alongside surveillance and investor education.
Small-Cap Stocks and Social Media at the Centre of the Threat
Pump-and-dump schemes typically target thinly traded, low-liquidity securities where relatively small volumes of coordinated purchaseing can trigger outsized price movements. Promoters then amplify the price rise by spreading misleading claims or rumours, often suggesting insider knowledge or imminent corporate developments.
ASIC says today’s schemes are increasingly global in nature. Retail investors are lured through paid social media advertising, online forums, and encrypted messaging apps such as Telegram and WhatsApp. In some cases, scammers have gone as far as impersonating Australian celebrities to add legitimacy to investment pitches.
Once retail traders pile in to chase momentum, the organisers rapidly trade their holdings at inflated prices, leaving late entrants with steep losses when liquidity evaporates.
“Pump-and-dump operators zero in on small-cap stocks with low liquidity, where misleading announcements or rumours can have an outsized impact on price,” said Amanda Zeller, ASIC Senior Executive Leader for Market Integrity. “Unfortunately, momentum traders are often the ones left holding losses once the instigators exit.”
Global Regulators view Rising Sophistication
The issue is far from confined to Australia. ASIC confirmed that pump-and-dump activity was a key topic at a recent meeting of international market regulators in London, with authorities from Asia, Europe, North America and Oceania highlighting a common trend: schemes are becoming more technologically advanced and increasingly cross-border.
Regulators have observed criminal groups hacking brokerage accounts to place trades, exploiting regulatory gaps between jurisdictions, and using highly targeted advertising algorithms to reach potential victims. The United States’ (FINRA) and New Zealand’s Financial Markets Authority (FMA) have both issued recent public warnings.
The U.S. (FBI) reported a 300% year-on-year increase in victim complaints related to pump-and-dump scams, spanning both equities and crypto-assets.
ASIC Commissioner Alan Kirkland said the growing coordination between regulators is critical. “This is a global issue that requires regulators to work together. Market manipulation undermines confidence, distorts price discovery, and causes real financial harm to everyday investors.”
Surveillance Meets Enforcement
ASIC says it is activity using real-time surveillance systems that integrate transaction data with social media and online forum analysis. Platforms under watch include X, Reddit, Discord, HotCopper, WhatsApp and Telegram.
The recent sentencing of four individuals involved in an Australian-based pump-and-dump scheme highlights the regulator’s enforcement approach. The group used Telegram chat rooms to coordinate trades, artificially inflate share prices and then trade at a profit. All four pleaded guilty to conspiracy to commit market rigging and dealing with .
ASIC Chair Joe Longo said the case sends a clear message. “Pump-and-dump trading isn’t just illegal — it damages trust in our financial markets. ASIC will continue to take decisive action against those who attempt to manipulate the market.”
What Investors Should Watch For
ASIC’s consumer guidance stresses that pump-and-dump schemes often share common red flags. These include unsolicited investment pitches, urgent calls to act rapidly, coordinated “finfluencer” endorsements, and sudden spikes in price or trading volume for obscure securities.
Scammers may direct investors into private chat groups, claim exclusive access to inside information, or use fake celebrity endorsements to create credibility. Regulators stress that legitimate public figures are extremely unlikely to recommend individual stocks or crypto-assets.
Investors are also urged to be cautious of paid search results and sponsored social media posts, particularly when they promote unfamiliar overseas securities.
Reporting and Prevention Remain Key
ASIC encourages to act rapidly by reporting concerns to Scamwatch, ReportCyber, or the relevant market operator. ahead reporting assists regulators identify networks of connected accounts and intervene before losses escalate.
While enforcement remains a priority, regulators acknowledge that education and vigilance are equally significant. As holiday trading activity increases and retail participation rises, authorities warn that the risk of manipulation is likely to grow.
“The objective of these schemes is to create urgency, a sense of exclusivity, and fear of missing out,” ASIC said. “If something feels rushed, secretive or too excellent to be true, it usually is.”
