A stockmarket trader who used the online chat forum HotCopper to ‘pump and dump’ shares faces the possibility of a long jail sentence after pleading guilty to 23 charges.
A stockmarket trader who used the online chat forum HotCopper to ‘pump and dump’ shares faces the possibility of a long jail sentence after pleading guilty to 23 charges.
Gabriel Govinda, a 40-year-old resident of Melbourne, was known online as Fibonarchery when he was an active stockmarket trader.
He has pleaded guilty to 23 charges of manipulation of listed stocks on the Australian Securities Exchange and 19 charges of illegal dissemination of information relating to the manipulation.
Mr Govinda used 13 different share trading accounts, held in the names of friends and relatives, to manipulate the share price of 20 different listed stocks.
These include Altura Mining, Alchemy Resources, AVZ Minerals, Brumby Resources, BBX Minerals, Stratum Metals, 3D Resources, Questus, Haranga Resources, Cellnet Group, Quantum Energy, Rectifier Technologies and Sun Biomedical.
The offences occurred between September 2014 to July 2015.
His offences included trading between the accounts he controlled – known as wash trading.
Mr Govinda also used fake, ‘prop’, or ‘dummy’ bids to falsely increase the perceived demand, and ultimate price, for listed stocks.
The Australian Securities and Investments Commission said the manipulation charges were contrary to s1041B of the Corporations Act.
This is the first time a person has been convicted of charges under this section.
Mr Govinda also breached s1041D of the Corporations Act in relation to his posts on HotCopper, in which he illegally disseminated information about his wash trades and dummy bids.
ASIC said he was seeking to increase (or pump) the share price, then selling (or dumping) the listed stocks at a higher price.
In one HotCopper post, Mr Govinda stated “dummy bids are all part of the fun and games and cat and mouse of the stockmarket!".
Mr Govinda faces a maximum penalty for each charge of 10 years' imprisonment or a fine of up to $765,000, or both.
In March 2019, the maximum penalty for these offences was increased to 15 years imprisonment.
ASIC said it has noted a concerning trend of social media posts being used to coordinate ‘pump and dump’ activity in listed stocks, which may amount to market manipulation in breach of the Corporations Act.
“ASIC has recently observed blatant attempts to pump share prices, using posts on social media to announce a target stock, a designated time to buy and a target price or percentage gain to be reached before dumping the shares,” it stated.
“In some cases, posts on social media forums may mislead subscribers by suggesting the activity is legal.”
ASIC said it expects market participants to promptly submit suspicious activity reports where they see this type of pump and dump activity.
The HotCopper chat forum is owned by ASX-listed company The Market Herald.
It claims to have 250,000 registered members, and more than 200,000 unique visitors every month.
