Introduction
At YTL LLP, our seasoned white-collar crime and regulatory enforcement team has been at the forefront of defending clients implicated in complex market manipulation cases, including the rising tide of ramp-and-dump schemes in Hong Kong.
As highlighted in our recent update on Suspect arrested in Singapore to face securities fraud charge in Hong Kong, the Hong Kong District Court is advancing with criminal proceedings against individuals accused of ramp-and-dump market manipulation, with trial dates scheduled for 2026 or 2027. These cases stem from investigations by the Securities and Futures Commission (“SFC”).
As discussed in Latest Trends in Hong Kong SFC Enforcement: Key Insights and Developments, ramp-and-dump is a type of market manipulation where individuals use numerous accounts to corner and “ramp” up the price of a listed stock, and “dump” the shares to other investors (commonly induced through circulating favourable information about a stock on social media) at an artificially high price. As there is no longer demand for the shares, the share price would then collapse.
Recent developments
Over the past eight months, the SFC has announced at least three upcoming sets of District Court proceedings involving ramp-and-dump schemes, underscoring the regulator’s continued focus on combating market misconduct in Hong Kong.
The suspects face charges including conspiracy to defraud and conspiracy to employ a scheme with intent to defraud or deceive in securities transactions under common law, section 300 of the Securities and Futures Ordinance (Cap 571, the “SFO”) and sections 159A and 159C of the Crimes Ordinance (Cap 200), and/or money laundering under sections 25(1) and 25(3) of the Organized and Serious Crimes Ordinance (Cap 455, the “OSCO”). Notably, one of the largest cases involves 19 defendants, all required to remain on bail pending trial.
These developments highlight the SFC’s ongoing commitment to protecting market integrity and investor interests.
Legal framework and penalties
Under section 300 of the SFO, it is a criminal offence to employ a fraudulent or deceptive scheme in securities transactions, punishable by fines up to HK$10 million and imprisonment for up to 10 years. The money laundering offence under the OSCO carries similarly severe penalties, including fines up to HK$5 million and imprisonment up to 14 years. The District Court’s seven-year sentencing cap further complicates risk assessment for defendants.
Key risks to and takeaways for licensed corporations
Licensed corporations face significant exposure when employees engage in ramp-and-dump schemes, and assist clients in opening and trading in accounts with these licensed corporations.
To mitigate these risks, we offer tailored solutions assigned with regulatory expectations:
- Compliance training programs: we design and deliver targeted training sessions on market misconduct, equipping staff to identify red flags such as unusual trading patterns or social media-driven securities promotions.
- Establish monitoring systems: our team assist firms in implementing data driven surveillance tools to detect suspicious trading activities early, ensuring adherence to SFC guidelines.
- Self-reporting strategy: we guide our clients through self-reporting process under the SFO, minimising reputational damage and potential penalties through timely, structured disclosures.
How we can support you
Our team has extensive experience representing clients in regulatory investigations and prosecutions relating to market manipulation, including ramp-and-dump cases. Our firm has secured favourable outcomes for clients across industries.
Contact us today to learn how we can help protect your interests in ongoing proceedings, or strengthen your compliance infrastructure against emerging threats. Let our experience assist you in mitigating risks and responding to enforcement actions in this evolving enforcement landscape.
Tiffany Lee, Of Counsel
tiffanylee@hkytl.com; +852 3468 7038
Alfred Leung, Partner
alfredleung@hkytl.com; +852 3468 7202
This article is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this article. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.
