ASIC charges four over alleged pump and dump Telegram scheme

The corporate regulator alleges four operators behind an ASX ‘pump and dump’ chat group made more than $85,000 from the scheme.

The Australian Securities & Investments Commission’s Tim Mullaly, Joe Longo, Simone Constant, Alan Kirkland and Kate O’Rouke at a Parliamentary hearing. Picture: Jane Dempster/The Australian.

Four alleged ringleaders of one of Australia’s largest “pump and dump” Telegram channels have appeared in court after a three-year ASIC pursuit.

Syed Yusuf, Larissa Quinlan, Emma Summer, and Kurt Stuart appeared in the Downing Centre Local Court in Sydney on Tuesday charged with conspiracy to commit market rigging and false trading.

They were also charged with dealing with the proceeds of crime in relation to the money obtained from the alleged pump and dump scheme.

The group faces a maximum 15 years jail or up to $1m in fines.

ASIC alleges the four made over $85,000 as ringleaders of the “ASX Pump and Dump Group”, a Telegram channel that attempted at least nine pumps of stocks on the ASX.

The regulator claims the four operated an “Admin Group” to co-ordinate their activities.

ASIC took aim at the group in 2021, entering the group to warn members the Telegram chat room was engaging in “illegal” activity.

“We can see all trades and have access to trader identities. We’re monitoring this platform and we may be investigating you,” ASIC told the group.

“You run the risk of a criminal record, including fines of more than $1M and prison time by being involved.”

As previously revealed in The Australian, ASIC spent a fortnight pursuing the Telegram users in September 2021, concerned the group of almost 400 members were engaging in an attempt to manipulate the share prices of Australian smallcaps.

At its peak the group had at least 1666 members.

A separate Telegram “ASX Pump and Dump Channel” was also created at this time, with more than 1030 subscribers.

ASIC tracked the trades in targeted companies as it attempted to discover the operators of a “pump and dump” Telegram chat. Picture: NewsWire / John Appleyard

Favoured targets of the group included security authentication small-cap YPB – a minnow trading with a market capitalisation of just $12m – and electric battery manufacturer and graphite miner Magnis Energy Technologies.

However, ASIC’s case alleges the pumping of shares in ASX listed operators Marquee Resources, TTA Holdings, Albion Resources, Australasian Gold, Ozz Resources, Locksley Resources, Culpeo Minerals, Jayex Technology, and Western Gold Resources.

The regulator alleges shares in these companies were pumped over a 22 days in September 2021.

ASIC alleges the four ringleaders told investors to buy shares in these companies, in which they had actually already purchased shares.

The regulator alleges the share price of these companies soared after they were targeted by the Telegram group, in some cases rising almost 100 per cent, before collapsing.

ASIC alleges the Telegram operators engaged in blatant pumping of stocks, noting they would seek to target companies of $15m market cap or less.

Posts to members included instructions that allegedly told them “there is nothing illegal in participating in a Pump and Dump scenario” noting “Big instos(sic) have been doing this daily since the dawn of man”.

ASIC allegedly tracked down the operators of the Telegram channels by reviewing trades in targeted companies to identify investors who bought shares prior to their pump.

However, the regulator’s investigations were frustrated by the Russian-owned Dubai-headquartered messaging app Telegram, which only closed the chat groups but declined to reveal the identities of their operators.

ASIC referred the matter to the Commonwealth Department of Public Prosecution in December 2022.

ASIC chair Joe Longo said the regulator was “upholding the integrity” of Australia’s financial markets.

“Market manipulation is illegal. Pump and dump schemes are a form of financial fraud, eroding investor wealth, threatening the integrity of our markets and potentially the Australian economy more broadly,” he said.

“This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law. Co-ordinated attempts to manipulate the market are a criminal offence.”