Kiwi investors are being caught by a new “pump and dump” scam, says the Financial Markets Authority (FMA).
FMA Director of Markets, Investors and Reporting, John Horner says: “As we start World Investor Week, aimed at educating and protecting investors, it is timely to remind Kiwi investors about this latest version of the deepfake impersonation scam. We have issued a new warning.”
“This current scam uses social media scam advertisements featuring an impersonated business leader, encouraging investors to join a fake investor chat group. The FMA first raised its concerns about the impersonations in a public warning issued in August this year, and has received further information showing the scam is part of a global network of scams aimed at market manipulation.”
A pump and dump occurs when a person buys shares in a company and starts an organised campaign to increase (or ‘pump’) the share price. They then sell (or ‘dump’) their shares and make a profit, while the other shareholders suffer financial losses as the share price falls.
Often those running a ‘pump and dump’ use social media and online forums to create a sense of excitement about buying a company’s shares by spreading false information about the company’s prospects. This excitement and interest artificially drives the share price up as they lure investors. This is considered a form of market manipulation.
The pump and dump scam uses Facebook and Instagram ads impersonating a variety of well known Kiwi business leaders to target Kiwi investors, inviting them to join a chat group on a messaging platform such as WhatsApp. There, they are encouraged to use reputable trading platforms to buy low-value shares in companies listed on overseas exchanges, to artificially inflate the share price. The scammers sell their own shares at the inflated price and, when the price later drops, the victims are left bearing the loss.
After a victim suffers a loss, the scammers often claim, falsely, that the victim is entitled to compensation or reimbursement. The scammers then collect personal information and further payments from the victims.
“We have received a number of complaints, with multiple victims having lost significant amounts,” said John Horner.
“These complaints are likely only the tip of the iceberg. Because these impersonation pump and dump scams play out over days and weeks, it’s possible there are others happening in New Zealand right now, with the scammers potentially pivoting to another company’s shares.
“We encourage New Zealanders to take extra care when considering investment decisions and seeking out investment advice. If an organisation is offering investment tips through social media, be cautious. Report any suspicious activity to the social media channel, to the company involved and to the FMA.
“We urge extreme caution to investors impacted by this or other scams which may include ‘opportunities’ to trade out of this position or support to recover funds lost, these are also likely to be scams.”
The FMA is also sharing case details with the relevant overseas financial regulators, given some of the pumped shares are listed on a US exchange (NASDAQ) and some of the pumped companies are based in China. “There are currently similar scams operating overseas, with a warning recently issued by the FBI.
How to recognise and avoid pump-and-dump schemes
Be cautious when interacting with ads for financial services on social media. If an ad features a well-known business leader or financial commentator, they may be an imposter.
Do not engage with any unsolicited messages regarding financial advice or trade recommendations.
Before you act on any trade recommendations, check that the person providing the advice is a licensed financial adviser registered on the FSPR.
Be sceptical about urgent or time-sensitive trade recommendations, particularly for emerging or low-priced shares. Scammers will often pressure potential victims to act quickly, leveraging investors’ fear of missing out.
30 September 2025
Source: Investment advice group chats used in suspected pump-and-dump schemes | Financial Markets Authority