The Securities and Futures Commission (SFC) issued a warning today (Wednesday) about ramp and dump schemes that target retail investors through instant messaging apps and social platforms, where scammers build trust by impersonating legitimate stock commentators before orchestrating coordinated pump operations on thinly-traded shares.
Small-Cap Stocks Become Target for Coordinated Manipulation
The fraud follows a predictable pattern. Scammers reach out to potential victims on social media, presenting themselves as reputable market experts with insider knowledge.
They push investment tips on small-cap or illiquid stocks, claiming to offer guaranteed high returns. Once enough investors pile into the stock and drive up the price, the fraudsters dump their holdings at inflated levels and disappear.
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Victims often find themselves stuck with worthless shares as prices collapse. In some cases, the SFC says, investors were directed to fraudulent trading platforms or apps where they later couldn't withdraw their money.
Hong Kong has been battling these schemes for years. The regulator charged 24 individuals in a major ramp-and-dump crackdown back in 2023, and froze client accounts in 2021 over similar suspected manipulation. The problem persists despite enforcement efforts.
Recovery Scams Add Insult to Injury
What makes these schemes particularly cruel is the second wave of fraud that often follows. After victims lose money in the initial manipulation, the same fraudsters sometimes circle back with a different pitch. They claim "compensation" can be arranged if the victim pays additional "deposits" or "handling fees." Once the money transfers, the scammers cut off all contact.
The SFC notes that victims rarely know who they're actually dealing with.
"Most of the time, investors do not know the true identities of the people who urge them to buy the stock or the reliability of the information they provide," the regulator said. Fake social media profiles, counterfeit documents, and impersonation of trusted commentators help build credibility.
This pattern mirrors broader trends across global markets. Belgium's FSMA reported a 44% jump in fraud complaints in 2024, with half linked to crypto scams. The UK's FCA said investment scams hit 800,000 victims by late 2025, prompting new consumer protection tools.
Regulators Push SMS Verification and Phishing Defenses
Hong Kong has been working on technical fixes to combat the scam epidemic. The SFC pushed brokers to adopt SMS verification schemes last year and banned certain broker text links after phishing attacks targeted traders.
The regulator is now urging investors to be skeptical of offers that seem too good to be true, especially from social media contacts. It specifically warned against sending trading screenshots to online "friends" and stressed that legitimate firms don't ask for deposits into individual bank accounts.
The SFC says it has reported the latest cases to Hong Kong Police and will continue coordinating with law enforcement. Investors who spot suspicious activity can report it through the SFC's Alert List or the Police's Anti-Deception Coordination Centre.
Similar manipulation schemes have triggered enforcement actions elsewhere. Australia's ASIC ramped up pump-and-dump warnings in December 2025 after securing convictions against four individuals, while the UK's FCA has dealt with a wave of impersonation scams targeting major brokers including XTB.
