The AMF warns the public about group chats providing tips on shares

Source: based on information received on the AMF Epargne Info Service platform
 

In recent weeks, a number of retail investors have contacted the AMF to report this type of behaviour, a real example of which is shown above. The AMF urges the public to be extremely vigilant about these offers, which bear the features of the fraudulent “pump and dump” practice. Retail investors have clicked on advertisements on the Internet or social media and joined discussion forums on group chats such as WhatsApp. Others have been added to these discussion groups without even having requested this. They received suggestions to invest in shares, often US shares, with the lure of substantial gains in just a few days. After a period of growth, these shares eventually collapsed, and today these investors inform the AMF that they have lost most of their investment.

Dazzling promises of strong upside potential on a share to be seized quickly

The "pump and dump" technique is a practice that consists of approaching investors and luring them with a promise that a share has strong upside potential, which they need to seize quickly. The purchases generated in this way boost the share price and trading volumes, and support the pitch of the fraudster who generates new purchases, thereby maintaining buying pressure on the share.

In addition to the fact that this person does not have any authorisation or approval to recommend these shares for purchase, they fail to point out to their contacts that they hold often large quantities of these shares (or that they are acting on behalf of someone else), which they sell all the way up, thereby making high capital gains.

As soon as the sale has been completed, the share price falls sharply, causing significant prejudice to investors who end up with a large position bought at a high price on an illiquid share. The fraudster then seeks to reassure the retail investor, telling them not to worry and promising to help them recover or make up for the lost money.

The AMF urges retail investors to apply the following rules of vigilance:

• think critically and do not follow the advice of strangers in private messaging groups;
• bear in mind that scammers often operate over private messaging services;
• check that the person contacting you works for a company authorised to offer investment services in France on the AMF website. The AMF also provides  white and black lists;
• avoid promises of quick and easy money;
• finally, if you have any questions, you can contact the AMF : +33(0) 1 53 45 62 00 from Monday to Friday, from 9am to 12.30pm (price of a local call).

About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets.Visit our website https://www.amf-france.org/en