Acting Senior Superintendent Chow Cheung-yau said the raids involved luxury residences on The Peak, in Central and Wan Chai, and brokerages on Hong Kong Island.

“We have arrested the ringleaders, backbone associates, manipulators in stock trading and those transferring proceeds,” he said, adding brokerage staff, decoration workers, entrepreneurs and retirees, were among those arrested, and some were related.

Chief Inspector Cheung Hang-fai, of the Narcotics Bureau Financial Investigations Division, said a fraud syndicate was behind the scam and had targeted investment groups on social media platforms such as WhatsApp and WeChat, claiming they could offer stock tips or inside information.

The syndicate started operating in 2018 and had been active in the market ever since.

Ashley Alder, the commission’s CEO, said the syndicate raised the regulator’s attention when it had unusually large amounts of funds transferred to and from brokerages and banks.

Most of the time, investors were unaware of the true identities of the people who lured them into the trap, according to Cheng. In some cases, well-known investment advisers and market commentators have been impersonated.

“Fraudsters ramped up the price of a stock, then used social media to lure innocent investors to buy at a high price. They then sold the stock to make profit, and left the investors with huge losses” he said.

Hong Kong online stocks con men use romance, get-rich-quick schemes to trick victims

A source said an initial investigation showed the syndicate had used 18 stocks to lure investors.

Alder said the syndicate commonly targeted small listed companies, whose share prices were low and trading was thin.

“These companies become targets for fraud as their shares are easier to corner and their share prices can be manipulated with relatively small cash outlays,” he said.

While police and the SFC did not know how many victims were involved in the syndicate, Alder encouraged them to report their cases to the authorities.

Retired teacher Cathy Chan, 64, who told the Post she lost HK$1.2 million in one afternoon in July last year in a ramp and dump scam, welcomed the news of the arrests.

“I am happy for this and grateful to [the regulators],” she said.

Hong Kong get-rich-quick scam investors watch in horror as stock price spikes, crashes in hours

Another victim, a female executive in Singapore who was persuaded by a sweet-talking Hong Kong male suitor to invest into a stock and lost HK$700,000 last year, said she was cheered by the news of the arrests.

“But are we able to get back the money? Where will the money go after its frozen?” she said.

Alder said the court would decide on when to return the frozen proceeds to victims after the hearing.

Under the Securities and Futures Ordinance, those found guilty of engaging in manipulative stock market activities or transactions face maximum penalties of 10 years in prison, and a fine of up to HK$10 million.

The punishments for money laundering include a HK$5 million fine and 14 years in prison.

In 2020, police handled 544 reports of online investment frauds involving HK$266.3 million. This tripled the 167 cases and was more than five times the HK$48.6 million in losses, reported in 2019. There were 338 cases in 2018 involving HK$278.1 million.