Who should read this?
Investors, CEOs, CFOs, financial advisors, and general counsels for listed companies.

What happened?
ASIC has prosecuted a trader who worked to manipulate the market through the pump and dump of stocks. The conviction was brought under the information dissemination provisions of 1041D of the Corporations Act 2001 (Cth).

‘Pump and dump’ is the hyping of stock to inflate the share price, followed by selling once shares become overvalued. New investors are hit with subsequent losses. This trader used several trading accounts to falsify market activity and create perceived demand. This case is the first conviction of its kind, but ASIC also has another case pending trial in Queensland to be heard in August this year.

How serious is it?
The maximum penalty for a single charge is 10 years’ imprisonment or fines of up to $765,000, or both.

This case raised 23 charges of share manipulation and 19 charges of illegally disseminating information against the trader. It may attract significantly large penalties and pave the way for ASIC to prosecute further instances of illegal market activity.

Contact Glenn Vassallo (Managing Director), Scott Standen (Director) if you would like advice or assistance regarding this issue.