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Clifford Chance

Clifford Chance

Regulatory Investigations and Financial Crime Insights

That Influencer Lifestyle … finfluencer gets hefty sentence following wash trading and pump and dump conduct

A trader who used social media to artificially inflate the price of numerous stocks has received the first sentence in Australia for this type of market misconduct.

Gabriel Govinda, known online as "Fibonarchery", plead guilty to a litany of charges related to trading activities between September 2014 and July 2015, and received his sentence on 3 May 2023. He plead guilty in June 2022, to 23 charges of manipulation of shares and 19 charges of illegal dissemination of information relating to the manipulations. He received a 2.5-year prison sentence, released immediately on a 5-year recognisance and a fine of AUD 42,840. It is the first time a person has been sentenced under section 1041D of Australia's Corporations Act.

Govinda had set up 13 different trading accounts, using names of friends and family, to facilitate his market manipulation activities. He would trade between the accounts he controlled, a process commonly known as "wash trading". Wash trading signals to the market that there is increased activity in a particular stock (in an artificial sense), which results in reactive trading by third parties and often results in increasing the share price. Govinda also set up dummy bids to further the impression of increased demand in the stock.

Govinda took to the online platform HotCopper, a well-known Australian site for discussing listed company trading, to spruik the trading activity he had created to increase interest and activity in the shares. His ultimate goal was the pump and dump – increase the share price and then sell out at the increased price.

How did authorities know this was his plan? Because he kept a diary. When the securities regulator ASIC raided his premises in 2015, they found a notepad recording his grand plans. Amongst the notes was "sell to self to create illusion of volume" and "sell stock down to yourself then buy stock up to yourself. Buy cheap, make it expensive again, sell to others."

Those chasing that influencer lifestyle should take note, 'Fibonarchery' arguably got off lightly. Since his offences in 2015, there has been a major overhaul of the penalty provisions for these type of offences. The maximum penalty for these offences is now a 15-year prison sentence.

The key lesson for finfluencers (and others) here? Probably just best to keep your trading activities off social media.

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