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When online advice is off-target

By Arthur Chan

Hong Kong, 8 November 2023: Investment comes with risk, hence the importance of due diligence in order to make a fully informed decision. The digital revolution, however, with on-the-go financial information and online trading platforms, has lowered the barriers and there is now a proliferation of casual, inexperienced citizens testing the water, with decidedly mixed results. Further, social media is proving a strong influence on their decisions.

We have seen negative examples of this in Hong Kong. The 28 arrests made so far in the ongoing JPEX cryptocurrency exchange scandal include a number of online influencers and minor celebrities who are alleged to have talked up the platform despite lacking investment expertise. Police have received more than 2,500 complaints over the JPEX scandal involving more than HK$1.5 billion in funds.

Just recently, former Hong Kong leader CY Leung was forced to warn the public not to fall for a suspected scam after his image and fake quotes were used in bogus online adverts to lure people to a suspicious cryptocurrency trading platform. He denied endorsing the Bitradar platform or making any comments about it. The advert included made-up quotes from an interview that never took place.

Social media has been a factor in another scandal currently making headlines. Last month, the Securities and Futures Commission (SFC), the Independent Commission Against Corruption (ICAC) and the Accounting and Financial Reporting Council (AFRC) conducted their first tripartite operation against two Hong Kong-listed companies on suspicion that they falsified corporate transactions totalling HK$193 million.

Some 16 premises were searched by the three agencies and the ICAC made three arrests. The suspected fictitious transactions were uncovered during the course of a year-long SFC-ICAC operation against a suspected ramp-and-dump syndicate. That operation saw eight people arrested last November and a further five detained in March.

Ramp-and-dump is a form of market manipulation where fraudsters use different means to “ramp” up the share price of a listed company and then “dump” the shares to other investors at an artificially high price. The SFC alleges that in the current case, the suspects used social media to lure unsuspecting investors, many of whom were left facing substantial losses. The SFC’s Executive Director of Enforcement, Christopher Wilson, noted after the first round of arrests: “Combating social media ramp-and-dump schemes has been and remains one of the top enforcement priorities of the SFC.”

Yet, despite the warnings from regulators, high-profile scandals and efforts to better educate the public, some citizens still rely on social media for investment guidance. This is true in Hong Kong and elsewhere. Earlier this year, a landmark report by the Cyprus Securities and Exchange Commission (CySEC) examined investment habits in the UK, France, Germany and its home market. It found 22% of retail investors were making decisions based on digital promotions or celebrity endorsements seen on social media. Young people were especially drawn to TikTok, YouTube, Instagram and Twitter, with 31% of respondents saying they had made a financial investment based on the advice of a financial influencer on those channels.

“Too many investors, including young people, are taking real risks with their money because they are taking advice and recommendations from unreliable sources, ranging from family members and friends to celebrity endorsements on social media platforms, without properly checking out the entity they’re buying from,” noted a CySEC spokesman.

It will be of little comfort to those who have had their fingers burned in Hong Kong’s recent scandals, but the enforcement agencies are showing a willingness to vigorously crack down on rogue online operators. In the meantime, regardless of where investors obtain their information, they are urged to conduct thorough research and, if in doubt, consult a trusted financial advisor.

Arthur Chan is a Senior Associate with BC&C. He specialises in Criminal Litigation and cyber fraud recovery claim and also develops a broad range of civil and commercial litigation such as immigration, personal injuries and employment issues. He has successfully dealt with cases involving account freezing and recovery, in one notable instance retrieving more than US$1 million that was stolen in an email scam. He can be contacted at

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