MAS and SGX Raises Red Flag Amidst US’ GameStop Trading Frenzy

MAS and SGX Raises Red Flag Amidst US’ GameStop Trading Frenzy

by February 3, 2021

The Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) have urged the public to be on heightened alert to the risks related to trading in securities incited by online discussion forums and social media chat groups.

MAS and SGX RegCo said in a statement that they are closely monitoring market activities for signs of false trading or other forms of misconduct.

“Restrictions may be placed on the trading accounts of those suspected of such misconduct and the relevant securities may be placed under designation or suspension. MAS and SGX RegCo are working closely with SGX member firms to ensure our market remains orderly,” according to the statement.

Given the recent activities in the US markets relating to stocks such as GameStop, AMC Entertainment Holdings, and BlackBerry, both regulators noted that there might be possibilities for similar speculative activities in the Singapore stock market based on the discussions in online websites and platforms.

SGX RegCo and MAS have cautioned the public against certain individuals who may exploit this interest for their own benefit through “pump and dump” activities that can amount to market misconduct under the Securities and Futures Act (SFA).

The regulators said that these perpetrators may do so by setting up positions in certain securities. They then use social media chat groups to incite investors to buy these securities in a manner similar to how individual investors collectively pushed up certain share prices in the US.

As soon as the prices of these securities have risen to specific levels, such perpetrators may then sell the securities which they had accumulated earlier without alerting other investors.

SGX RegCo and MAS warned that any conduct that intentionally, knowingly, or recklessly creates a false or misleading appearance regarding the active trading, market or price of securities is prohibited under the SFA.

They elaborated that other prohibited acts include but are not limited to the making or dissemination of false or misleading statements, fraudulent inducement to deal in securities, and the employment of manipulative and deceptive devices. Investors should make sure they refrain from conduct that could infringe the SFA. Firm action will be taken against those who breach the SFA or other laws and regulations.

Both regulators had issued a similar warning to the public against “pump and dump” activities exploiting Telegram chats and other social media channels back in December.


Featured image credit: Photo by Michael Förtsch on Unsplash