The Security and Exchange Commission of Pakistan (SECP) yesterday announced that it had caught a “self-styled stock market guru,” who influenced public opinion through social media and earned millions of rupees by tricking people with his so-called “pump and dump” scheme. Many analysts believe that this is the right step towards deterring such self-proclaimed market gurus, who provide wrong financial information to the public for their personal benefits.
“In the wake of a sophisticated surveillance operation and a detailed investigation, the SECP has been able to unearth and act against a financial cybercrime. A self-styled stock market guru who gave self-serving investment tips to the public on Facebook has been caught red handed by the SECP,” the commission claimed in a press statement.
Shedding light on the strategy used by the accused in the statement, the SECP said that he was defrauding small investors through a pump and dump strategy. He would buy a large quantity of shares of the company and then misguide his followers about the financial prospect of the company through Facebook. When his followers on social media rushed to purchase the stock, he would immediately sell his holdings. He used this trick several times and had earned approximately PKR 58 million in the past six months.
The SECP, in its attempt to fight financial fraud (such as financial cybercrime), has been leading an initiative aimed at the formation of a high-level financial cybercrime prevention committee. The committee, comprising heads of SECP, State Bank of Pakistan (SBP), National Accountability Bureau (NAB), and Federal Investigation Agency (FIA) will take proactive and broad-based enforcement action against financial criminals. Apart from this initiative, the SECP has also been taking various initiatives to curb financial frauds. For instance, the financial regulatory agency has been closely monitoring the emerging threat for few months.
In a bid to inform general public about market manipulators, the SECP has issued several press releases and public notices. Moreover, investor awareness campaign has been carried out by JamaPunji (SECP’s investor education initiative). The SECP has also set up a hotline and email service to make it easy for people to report fraudulent activities.
Lastly, the SECP has also decided to form a dedicated team to investigate financial cybercrime. The team will be housed within the Surveillance, Supervision and Enforcement Department for 24/7 monitoring of websites and social media for potential abuse related to online trading platforms, stock tipping, and crowd funding, etc.