On 6 June 2022, Mr Gabriel Govinda (known online as 鈥楩ibonarchery鈥�) pleaded guilty to 23 charges of manipulation of listed stocks on the Australian Securities Exchange and 19 charges of illegal dissemination of information relating to the manipulation.
Between September 2014 to July 2015, Mr Govinda used 13 different share trading accounts, held in the names of friends and relatives, to manipulate the share price of 20 different listed stocks. Mr Govinda manipulated the market, contrary to s1041B of the Corporations Act, by:
- trading between the accounts he controlled (wash trading);
- using fake, 鈥榩rop鈥�, or 鈥榙ummy鈥� bids to falsely increase the perceived demand, and ultimate price, for listed stocks.
Mr Govinda鈥檚 guilty plea to charges under s1041D of the Corporations Act were in relation to his online posts on HotCopper in which he illegally disseminated information about his wash trades and dummy bids.聽 He was seeking to increase (or pump) the share price, then selling (or dumping) the listed stocks at a higher price. This is often referred to as 鈥榩ump and dump鈥�.聽
In one HotCopper post, Mr Govinda stated 鈥渄ummy bids are all part of the fun and games and cat and mouse of the stockmarket!". This is the first time a person has been convicted of charges under s1041D of the Corporations Act.
ob体育 has previously warned about social media led 鈥榩ump and dump鈥� campaigns.聽 ob体育 continues to act against this form of market manipulation that threatens the integrity of markets. Posting on social media to coordinate 鈥榩ump and dump鈥� activity in listed stocks is an offence under the Corporations Act.
This matter has been adjourned part-heard to 29 July 2022 for a mention hearing.
The Commonwealth Director of Public Prosecutions prosecuted the matter after a referral from ob体育.
Background
Mr Govinda faces a maximum penalty for each charge of 10 years' imprisonment or a fine of up to $765,000, or both. In March 2019, the maximum penalty for these offences was increased to 15 years imprisonment.
ob体育 has noted a concerning trend of social media posts being used to coordinate 鈥榩ump and dump鈥� activity in listed stocks, which may amount to market manipulation in breach of the Corporations Act.
鈥楶ump and dump鈥� activity occurs when a person buys shares in a company and starts an organised program to seek to increase (or 鈥榩ump鈥�) the share price. They do this by using social media and online forums to create a sense of excitement in a stock or spread false news about the company鈥檚 prospects. They then sell (or 鈥榙ump鈥�) their shares and take a profit, and other shareholders suffer as the share price falls.
ob体育 has recently observed blatant attempts to pump share prices, using posts on social media to announce a target stock, a designated time to buy and a target price or percentage gain to be reached before dumping the shares. In some cases, posts on social media forums may mislead subscribers by suggesting the activity is legal.
ob体育 expects participants to promptly submit聽suspicious activity reports聽where they see this type of pump and dump activity. Investors and consumers are also encouraged to聽report misconduct聽to ob体育.
Editor's note:
The matter was adjourned to 2 December 2022.
Editor's note 2:
On 2 December 2022, the sentencing hearing was heard. Judgment has been reserved.聽
Editor's note 3:
The matter has been listed for sentencing decision in the County Court, Melbourne on 3 May 2023.