SINGAPORE — The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) on Tuesday (2 February) advised the investing public to be on high alert to the risks arising from trading of securities incited by online discussion forums and social media chat groups.
Warning against “pump and dump” activities, the authorities said they may place curbs on errant trading accounts if necessary.
“Restrictions may be placed on the trading accounts of those suspected of such misconduct and the relevant securities may be placed under designation or suspension,” the MAS and SGX RegCo said in a joint statement.
The regulators said they have noted the interest of investors in Singapore in recent activities in US markets relating to stocks such as GameStop, AMC Entertainment Holdings, and BlackBerry.
Shares of GameStop and AMC have surged in the US in recent weeks as amateur investors battled against Wall Street institutions such as hedge funds.
Last week, GameStop jumped almost 400 per cent while AMC surged more than 200 per cent amid the frenzy stirred by trading forums and social media posts. The volatile trading continued on Monday and Tuesday for the two counters as they vacillated between significant gains and losses.
The Singapore regulators said discussions in online websites and platforms suggest the possibilities for similar speculative activities in the local stock market.
“The public should be aware that certain individuals may exploit this interest for their own benefit through ‘pump and dump’ activities that can amount to market misconduct under the Securities and Futures Act (SFA),” MAS and SGX RegCo said.
The regulators warned that some perpetrators may set up positions in certain securities and use social media chat groups to incite investors to buy these securities in a manner similar to how the recent trading frenzy happened in the US.
As soon as the prices of these securities have risen to specific levels, such perpetrators may then sell the securities which they had accumulated earlier without alerting other investors, MAS and SGX RegCo noted.
“Any conduct that intentionally, knowingly, or recklessly creates a false or misleading appearance regarding the active trading, market or price of securities is prohibited under the SFA,” according to the statement.
The MAS and SGX RegCo said investors should make sure they refrain from conduct that could infringe the SFA and warned that “firm action will be taken against those who breach the SFA or other laws and regulations”.
The regulators said they are “closely monitoring market activities for signs of false trading or other forms of misconduct”.
The statement follows SGX RegCo’s warning on 10 December 2020 to the public of “pump and dump” activities exploiting Telegram chats and other social media channels.