So called 'pump and dump' operators - unscrupulous actors who start rumours about small cap securities to inflate the share price in the hope of making a quick profit, are increasingly targeting Australian investors ahead of the holiday period, with a notable rise in reports to the regulator.
ASIC is warning the public to be vigilant about widespread, coordinated pump and dump schemes targeting retail investors, including Australians trading in overseas markets, who can be tricked into buying thinly traded overseas stocks that ae then rapidly sold down by the promoters once the price has been inflated.
ASIC has also observed scammers fraudulently using the identity of Australian celebrities to lure victims into messaging apps like WhatsApp where they are directed to buy shares.
This warning comes as four people involved in a coordinated scheme to pump up Australian share prices, before dumping them at inflated prices were sentenced today in Downing Street Court.
Pump and dump uplift seen by international regulators
The rise of pump and dump schemes was a hot topic of discussion among a meeting of key financial regulators from Australia, Asia, Europe and North America in London last month, with ASIC's Amanda Zeller, Senior Executive Leader, Market Integrity, noting that the types of schemes were becoming increasingly sophisticated, with criminal gangs increasingly engaged in the activity.
Among the techniques observed have been cybercriminals hacking brokerage accounts to conduct trades, exploitation of differing regulatory regimes in cross border trades, and luring in prospective traders via ad targeting on social media. Regulators, including New Zealand's Financial Market Authority and the United States' Financial Industry Regulatory Authority (FINRA) have issued official warnings recently.
'Pump and dump operators zero in on small cap stocks with low liquidity, which means when misleading announcement or rumour is made, it has an outsized impact on the share price,' Ms Zeller said.
'That then draws in traders who watch for momentum in small cap stocks, who then pile in to ride the increase. Unfortunately, those are the ones left with the losses after the pump instigators have bolted.'
ASIC Commissioner Alan Kirkland said, 'Pump and dump schemes are a serious threat to market integrity and investor confidence. They can also result in unsuspecting investors losing money.
ASIC will continue to work with international regulators and take enforcement action where appropriate.
'This is a global issue requiring regulators connecting to tackle this harmful practice.
'ASIC is keeping a close eye on small-cap trading activity through its sophisticated real-time surveillance system and by integrating trade data with surveillance of social media and online forums, such as on X, WhatsApp, HotCopper, Reddit, Discord.
'ASIC takes market manipulation very seriously and we will not hesitate to take enforcement action where appropriate.'
Background
On 10 June 2025 four people involved in a coordinated scheme to pump up Australian share prices before dumping them at inflated prices plead guilty to multiple criminal charges (25-098MR).
New Zealand's Financial Markets Authority (FMA) has also issued a public warning about suspected pump and dump schemes affecting small-cap stocks listed on US exchanges.
The United States' Financial Industry Regulatory Authority (FINRA) has also issued an investor alert for pump and dump scams.
FINRA noted significant spike in investor complaints resulting from recommendations made by fraudulent 'investment groups' promoted through social media channels.
In July 2025, the Federal Bureau of Investigation (FBI) issued a Public Service Announcement noting there had been a 300 per cent rise in victim complaints about pump and dump scams in the last year. These scams related to both stocks and crypto assets.
In 2022, an ASIC report estimated that retail investors exiting risk, over potentially pumped events, incurred loss of $6.3 million per month.
Moneysmart guidance on spotting a pump and dump scam
The underlying tactics for a pump and dump scheme are like investment scams more broadly. Watch out for:
- Paid advertising. Spruikers might pay big money for advertisements to appear high in online search results. They also advertise through social media.
- A rush of finfluencer endorsements. Unscrupulous finfluencers may start spreading misleading or plain wrong information about a particular investment, maybe citing inside information. The coordinated activity can make it seem like investor hype.
- Social media ads directing investors to private chats where particular stocks are recommended
- Fake celebrity endorsements. Scammers will use images of well known identities in their marketing material, or the creation of fake social media profiles, to give credibility to their message. It is very unlikely that a well-known personality would be recommending investments in individual companies or crypto assets.
- Unsolicited marketing. You might receive an unsolicited email or phone call. Be wary of anyone spruiking the attractiveness of a specific investment and creating a sense of urgency.
- Forum comments. There might be a rush of commentary about a particular little-known investment across multiple online forums.
- Strange market behaviour. You might see a sudden price increase or spike in an investment that is new or not usually volatile.
Overall, the objective is to create in you a sense of urgency, a feeling of having special inside information, and a fear of missing a great thing.
How to protect your money
Pump and dump schemes can look very convincing. So, before you invest your money, check basic facts about what you're investing in and who with. Follow our stop, check and protect tips at check before you invest.
If you suspect a pump and dump scheme, act quickly to report it to SCAMwatch at the Australian Competition and Consumer Commission (ACCC), the ATO or ReportCyber.
