How Singapore investors are lured by foreign-stock scams
For more than a month, Aaron* thought he and his wife were learning how to trade stocks. Only later would they realise the lessons were part of the trap. The Singaporean business owner had found a group of self-styled investment experts on Facebook, claiming to offer foolproof tips and guaranteed returns. Soon, he and his wife, who were dabbling in stocks for the first time, were spending about…
For over a month, Aaron believed he and his wife were receiving guidance on stock trading. However, they soon discovered this was part of a trap. The Singaporean businessman found a group of self-proclaimed investment experts on Facebook, promising foolproof tips and guaranteed returns. Soon, Aaron and his wife spent about two hours daily in a WhatsApp group chat with dozens of others, learning from a "professor" how to judge bullish markets and identify high-potential stocks.
Through private messages, another expert advised Aaron on which stocks to buy, when to purchase, and when to sell, guaranteeing quick returns. Unbeknownst to them, they were ensnared in a pump-and-dump scheme. Fraudsters artificially inflate a company's share price by generating buying interest, then sell their holdings, leaving other investors exposed when the stock falls.
After profiting from two stocks under the guidance of the self-styled experts, the couple were told to prepare substantial funds for a stock with "high potential" that would "not come by often." Aaron took a bank loan to invest S$650,000 (US$512,000) in CMBC Capital, a Hong Kong-listed financial services firm. The price began to decline soon after their investment.
The experts' WhatsApp accounts vanished. Aaron struggled to repay the bank loan after losing over S$500,000. "I still have employees to pay and a family to feed," he lamented. "We are left trying to pick up the pieces because no one is here to help us recover our losses." Hong Kong stocks have long been a target for pump-and-dump scams, as fraudsters seek greater success by operating with foreign-exchange-listed stocks.
Analysts say victims may feel a strong sense of perceived legitimacy due to the familiarity of trading on recognized foreign exchanges. Hong Kong, with its low free float and active retail participation, provides an ideal environment for scammers to coordinate buying. Low-cost online trading platforms in Singapore, such as Moomoo and Tiger Brokers, make it easier for victims to invest in foreign stocks.
In August 2021, the Singapore Police Force warned the public about the resurgence of pump-and-dump scams, conducting a joint investigation with Hong Kong police four months later. Nine people in Hong Kong and one in Singapore were arrested, with assets exceeding HK$70 million (US$9 million) frozen. Analysts urge collective measures to prevent such scams, urging individuals to verify investments and platforms to implement additional safeguards.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
