Matthew Daley
Partner •
Sydney
ASIC claims first scalp with "pump and dump" trader pleading guilty to market manipulation
Time to read: 1.5 minutes
This is the first time a person has been convicted of charges under s1041D of the Corporations Act 2001.
The architect of a 'pump and dump' trading scheme which he promoted via social media has pleaded guilty to 23 charges of manipulation of ASX-listed shares and 19 charges of illegal dissemination of information.
Between September 2014 and July 2015, Gabriel Govinda - known online as ‘Fibonarchery’ - ran what is known as a "pump and dump" scheme: an organised program to buy up shares in companies which he would promote as hot prospects, thereby artificially inflating the share price (pump), before selling down his stakes at the inflated price (dump).
In breach of s1041 of the Corporations Act, Mr Govinda used a popular online share trading forum to illegally disseminate information about trades between accounts which he controlled (wash trading) and used 'dummy' or 'fake' bids to falsely increase the perceived demand and ultimate price of the listed shares. He used 13 different share trading accounts held in the names of friends and family to manipulate the share price of 20 different listed shares.
Mr Govinda bragged on the forum “Dummy bids are all part of the fun and games and cat and mouse of the stockmarket!”
His exploits came to the attention of ASIC, which referred the matter to the Commonwealth Director of Public Prosecutions. Mr Govinda now faces a maximum penalty for each charge of 10 years’ imprisonment or a fine of up to $765,000 or both.
Statement from ASIC
In a statement, ASIC said it would continue to act against "pump and dump" campaigns as a form of market manipulation which threatens the integrity of the markets. The conviction of Mr Govinda also follows recent ASIC guidance to 'FinFluencers' about the line between providing factual information, general advice and personal advice, and what will constitute misleading and deceptive conduct.
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