‘Dummy bids part of fun’: hotcrapper trader guilty of manipulation
Liam WalshReporter
Jun 7, 2022 – 3.32pm
A trader who pumped up and then sold penny stocks in sectors from mining to electronic goods has pleaded guilty to share manipulation, in a historic case involving posts on website hotcrapper.
Gabriel Govinda, using the online identity Fibonarchery, even once boasted: “Dummy bids are all part of the fun and games and cat and mouse of the stockmarket!”
The plea is the first under Corporations Act provisions relating to disseminating information. James Alcock
The 40-year-old’s pleas to 23 charges of share manipulation and 19 charges of illegally disseminating information related to the manipulation, entered in Melbourne’s Magistrates Court, could entail serious penalties of jail time or hefty fines.
The Australian Securities and Investments Commission, which announced the pleas on Tuesday and had investigated the crimes, said it was the first conviction under the information dissemination provisions of 1041D of the Corporations Act.
It comes more than seven years after the crimes were committed.
Still, ASIC held the case up as an example of its action against “pump and dump” schemes.
Pump and dump is when people hype up the stock to inflate its share price, selling the shares as they become overvalued. New investors nurse subsequent losses.
Govinda’s charges related to trading in shares from September 2014 to July 2015 in 20 companies. All had low-level market capitalisations on the ASX, often in the sub-$10 million range, and some could fluctuate heavily.
Stocks targeted
He was dabbling in mining exploration and resource stocks including Brumby Resources, BBX Minerals,
AVZ Minerals, Zeus Resources, Stratum Metals, 3D Resources, Taruga Gold, Haranga Resources, Regalpoint Resources, Altura Mining and Alchemy Resources.
Other charges related to manufacturer of trucks to mining and construction industry ORH, environmental consulting and technology provider Pacific Environment, hot water and cooling systems distributor Quantum Energy, tracking system developer Bluechiip and biotechnology outfit Sun Biomedical.
Other technology-related companies whose shares were caught up in the trading were operator of e-commerce brands Disruptive Investment, mobile phone supplier Cellnet and electronic components maker Rectifier Technologies.
Share prices in many of the shares at the time of trading were often below 10¢ for the companies. Some were below 1¢.
The illegal trading involved share purchases worth $3.1 million, excluding brokerage.
ASIC said Govinda used 13 different share trading accounts, held in the names of relatives and friends, to manipulate the price.
He used techniques known as wash trading – buying and selling between accounts he controlled – which has or is likely to create a false or misleading appearance about active trading in the market. ASIC said Govinda also used dummy bids for company shares, which falsely increased the perceived demand and so price for the stocks.
‘ASX Wolf’ civil case
The dissemination charges all relate to posts he put on hotcrapper, a website for traders notorious for inflammatory commentary. “He was seeking to increase (or pump) the share price, then selling (or dumping) the listed stocks at a higher price,” ASIC said.
The commission said the maximum penalty for each charge is 10 years’ imprisonment or fines of up to $765,000, or both. The matter had been adjourned to a mention hearing for July 29.
Meanwhile,
ASIC’s separate civil action against Gold Coast-based share trader Tyson “ASX Wolf” Scholz has progressed with a seven-day trial scheduled to be heard from August 29.
