Hong Kong — Hong Kong police are struggling to deal with digital pump-and-dump schemes targeting brokerages. It is a little-known type of computer-generated fraud that surged in the Chinese territory in 2016. Although little money was involved — only about $20m worth of shares — there were 81 such incidents reported in 2016, more than triple the number in 2015, according to police. In the scheme, criminals invest in thinly traded penny stocks and then manipulate their share prices by ordering trades from hacked brokerage accounts. They earn profits by selling before the fraudulent trades are reported. After 2016’s cyber heist of $81m at Bangladesh’s central bank and hacks of ATMs around the world, authorities fear such pump-and-dump schemes could be increasingly used for electronic theft. Hong Kong is a favoured place for such attacks because of the number of thinly traded penny stocks and because its securities industry has fallen behind other financial centres in defending against...
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