Kiwi Investors Fall Victim to Pump and Dump Scam

Kiwi investors are falling victim to a recently identified “pump and dump” scam, as per the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko. FMA’s Director of Markets, Investors, and Reporting, John Horner, cautions investors to beware of this deceptive tactic, especially as World Investor Week is initiated to educate and safeguard investors. “This current scheme involves social media advertisements portraying a fictitious business leader, enticing investors to participate in a counterfeit investor chat group. Our initial concerns were raised in a public warning dated 19 August 2025, and recent findings indicate this deception is part of a global network of scams focusing on manipulating markets.”

In a pump and dump scheme, an individual purchases shares in a company and orchestrates a campaign to inflate (“pump”) the share price. Eventually, they sell off (“dump”) their shares for a profit, leaving other shareholders facing financial losses as the stock value plummets. Those behind a ‘pump and dump’ utilize social media and online forums to generate excitement around a company’s shares by spreading fabricated information about its future prospects. This false enthusiasm artificially drives up the share price as unsuspecting investors are duped. Such actions are classified as forms of market manipulation.

The pump and dump scam exploits Facebook and Instagram ads that impersonate various well-known New Zealand business figures to lure Kiwi investors, prompting them to join a chat group on platforms like WhatsApp. Once there, they are urged to use reputable trading platforms to acquire low-cost shares in overseas-listed companies, with the intention of inflating the share price artificially. The fraudsters cash in on their shares at the inflated price while leaving their victims to bear the financial losses when the stock price inevitably falls. Following a victim’s loss, the scammers falsely promise compensation or refunds and proceed to extract personal information and additional payments from them.

John Horner disclosed, “We have received numerous complaints, with several individuals suffering substantial losses. It is highly likely that these complaints represent just a fraction of the total incidents. Since these impersonation pump and dump deceptions unfold over an extended period, there may be ongoing schemes operating within New Zealand, with scammers potentially transitioning to target different company shares.” The Director advises New Zealanders to exercise extra caution when making investment decisions and seeking investment advice. If an entity is sharing investment tips through social media, vigilance is advised. Any observed suspicious activities should be reported to the respective social media platform, the implicated company, and the FMA.

Horner emphasized, “One of the FMA’s primary roles is to promote trustworthy and informed participation by businesses, investors, and consumers in the financial markets.” Therefore, the FMA is swiftly disseminating a revised public warning to alert individuals about the impact of this scam on investors and to educate the public on guarding against such scams. The FMA aims to deter scammers from operating within New Zealand by increasing awareness of their methods and prompting investors to carefully evaluate investment decisions for potential scams. Additionally, the FMA is exchanging case data with foreign financial regulators due to the listing of some pumped shares on the US exchange NASDAQ and the presence of some targeted companies in China.