Trader pleads guilty to manipulating share prices with ‘pump and dump’ posts

A trader who used the online name “Fibonarchery” has pleaded guilty to market manipulation and the illegal spreading of information over a social media scheme aimed at moving the share prices of companies listed on the Australian sharemarket.

The Australian Securities and Investments Commission (ASIC) on Tuesday said Gabriel Govinda was facing maximum penalties including hefty fines or prison time after pleading guilty to 23 charges of market manipulation of ASX-listed stocks and 19 charges of illegal dissemination of inflation relating to manipulation.

ASIC has been warning about “pump and dump” campaigns running on social media.Credit: Jim Rice

The guilty pleas follow regulator warnings about market manipulation schemes on social media, and ASIC said it was the first time someone has been convicted under a section of the Corporations Act dealing with the spreading of information about illegal trades.

The watchdog said Govinda, known online as “Fibonarchery”, had manipulated the market through an illegal scheme known as a “pump and dump”. This is where someone makes co-ordinated moves to increase a company’s share price, then sells the stock at a higher price for profit.

ASIC said Govinda manipulated the share prices of 20 stocks between 2014 and 2015, using 13 different share trading accounts that were held in the names of friends and family members.

It said he used the forum website HotCopper to illegally spread information about fake or “dummy” takover bids aimed at pumping up the price of stocks, and he made “wash trades,” which refers to trading between accounts controlled by the same trader.

ASIC said that in one post on HotCopper, Govinda said that “dummy bids are all part of the fun and games and cat and mouse of the stockmarket!”

ASIC said Govinda faces a maximum penalty for each charge of 10 years’ prison, or a fine of up to $765,000, or both, after he entered the guilty pleas on Monday. The matter has been adjourned to late July.

The case comes after the market watchdog recently sounded the alarm about people using social media posts to co-ordinate “pump and dump” schemes, which could amount to market manipulation.

ASIC last year warned of “blatant” attempts to pump and dump share prices on social media, pointing to posts announcing a “target stock, a designated time to buy and a target price or percentage gain to be reached before dumping the shares”.

The regulator has been reminding online traders that co-ordinating “pump and dump” activity in listed companies is illegal, and last year it joined chat groups on messaging apps such as Telegram to warn traders about the penalties they faced for such activity.

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