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SINGAPORE: Singapore authorities on Tuesday (February 2) issued a cautionary note to investors amid interest in recent market activities related to stocks such as GameStop, AMC Entertainment Holdings and Blackberry.
Investors should be on “heightened alert” to risks related to securities trading brought about by online discussion forums and social media chat groups, the Monetary Authority of Singapore (MAS) and the Singapore Stock Exchange Regulation said. (SGX RegCo) in a joint statement.
“MAS and SGX RegCo have noted the interest of investors in Singapore in recent activities in the US markets related to stocks such as GameStop, AMC Entertainment Holdings and BlackBerry,” authorities said.
“Discussions on websites and online platforms suggest the potential for similar speculative activities in the Singapore stock market.”
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SOME PEOPLE MAY EXPLOIT THIS INTEREST: AUTHORITIES
Authorities cautioned that some people may exploit this interest for their own benefit through “pump and dump” activities.
“These perpetrators can do this by establishing positions in certain stocks. They then use social media chat groups to entice investors to buy these stocks in a manner similar to how individual investors collectively drove the price of certain stocks in the US. . “, Explained the MAS. and SGX RegCo.
“As soon as the prices of these securities have risen to specified levels, such perpetrators can sell the securities they had accumulated earlier without alerting other investors.”
These “pump and dump” activities can constitute market misconduct under the Securities and Futures Act, authorities said.
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Under the Law, any conduct that “intentionally, knowingly or recklessly creates a false or misleading appearance with respect to active trading, the market or the price of securities” is prohibited.
It is also illegal to make or disseminate false or misleading statements, fraudulently induce others to trade securities, and employ manipulative and deceptive devices.
“Investors must ensure that they refrain from conduct that may violate the (Law),” authorities said, warning that “firm action” will be taken against violators.
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Tuesday’s warning comes after SGX RegCo alerted the public in December last year to potential market misconduct activities exploited by “Telegram chat groups and other channels where investment strategy is discussed.”
“These platforms can be useful for investors to share knowledge and information. However, we are aware of cases in which criminals can misuse these channels,” the regulator said.
SGX RegCo and MAS said Tuesday that they are closely monitoring market activities for signs of false trading or other forms of misconduct.
“Restrictions may be placed on the trading accounts of those suspected of such misconduct and the relevant securities may be placed under appointment or suspension,” authorities added.
“MAS and SGX RegCo are working closely with SGX member firms to ensure our market remains orderly.”
REDDIT VS WALL STREET
Organized investors on Reddit and other forums have recently targeted stocks in companies, such as Gamestop, that were shorted by hedge funds.
Major investors, such as hedge funds, have bet against GameStop, citing the poor financial health of the video game store chain as consumers shift toward buying over the internet.
As the company’s shares rose under attack from Reddit, large Wall Street firms were forced to buy back shares at higher prices to cover their losses, driving the price even higher.
One of the biggest victims Melvin Capital liquidated its position in the company and confirmed to the US media that it had received a rescue of US $ 2.75 billion from other investment funds.
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The enthusiasm for companies that many analysts expect to collapse has spread elsewhere, with movie theater chain AMC, furniture store Bed Bath and Beyond and business software maker Blackberry all seeing a volatile rise in their shares.
ALERTS FROM OTHER REGULATORS
Other regulators have issued similar alerts on stock prices.
The U.S. Securities and Exchange Commission (SEC) said last Friday that its regulators were monitoring the share prices of some Wall Street stocks that had been the target of a social media-driven campaign aimed at causing suffering. rich hedge funds.
“The commission is closely monitoring and evaluating the extreme volatility of the trading prices of certain stocks in recent days,” the SEC said in a statement, a day after some platforms restricted the transactions of GameStop, AMC Entertainment and others. stocks caught in the surge.
“We will act to protect retail investors when the facts show abusive or manipulative business activity that is prohibited by federal securities laws.”
Last Friday, the UK Financial Conduct Authority also warned British investors “in certain US-listed stocks that are being discussed online to exercise extreme caution.”
“Volatile markets are unpredictable and mean you can lose money quickly,” he added.
