Kiwi investors are being caught by a new “pump and dump” scam, says the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko.
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 19 August 2025, 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.”
“One of the FMA’s functions is to promote the confident and informed participation of businesses, investors, and consumers in the financial markets.
“We have therefore taken steps to urgently issue an updated public warning to raise awareness of how this scam impacts investors and educate the general public on how to avoid being scammed.
“Our aim is to make New Zealand an unattractive place for scammers to operate, by raising awareness of scam methods and encouraging investors to stop and think carefully before making investment decisions that might be driven by a scam.”
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
The FMA has also alerted New Zealand banks and businesses being impersonated to let them know the impersonation scam has pivoted and is using new tactics, and is encouraging them to share the FMA warning.
How the scam works
- Scammers promote investment club group chats through social media. Often, the scammers will publish ads impersonating business leaders or financial commentators to promote the group chats. In some cases, the scammers send unsolicited invitations to the group chats through messaging platforms like WhatsApp.
- In the group chats, an ‘investment mentor’ provides trade recommendations to group members. The group chats appear to have dozens of members, but they are populated primarily with bot accounts controlled by the scammers.
- The scammers may initially recommend purchasing shares of a large, well-known company such as Nvidia or Tesla. This is a tactic to build trust before drawing potential victims into the pump-and-dump scheme.
- Eventually, the scammers will recommend shares in a smaller company. Members are often encouraged to message the investment mentor or their assistant directly, who will guide them through the investing process.
- Over several weeks or months, the victims’ investments artificially inflate (or ‘pump’) the company’s share price. The scammers then sell (or ‘dump’) their holdings at the inflated price. When the share price collapses, victims are left bearing the loss.
- After the share price drops and the victims suffer a loss, the scammers may tell investors they are entitled to compensation or reimbursement. The scammers may ask victims to complete an online form, provide copies of their ID, or pay an application fees in order to gain access to the funds. This is a recovery scam, and is an attempt to harvest victims’ personal information or extract further funds.
How to recognise and avoid pump-and-dump schemes
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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.
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Do not engage with any unsolicited messages regarding financial advice or trade recommendations.
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Before you act on any trade recommendations, check that the person providing the advice is a licensed financial adviser registered on the FSPR.
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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.
What to do if you’ve been scammed
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Stop engaging with the scammers. Do not provide any further personal information or payments to them. Report the group chats to WhatsApp and block the scammers on all devices.
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If you have shared your bank account or credit/debit card details with the scammers, contact your bank immediately to secure your account.
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If you have downloaded remote access software on the instructions of the scammers, immediately contact an IT professional to have your device checked for malware. If you have accessed your bank account or other payment systems while the remote access software was operating on your device, report this to the relevant account providers.
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If you have shared any other personal information or downloaded any software at the scammers’ request, contact IDCare for help creating a plan to secure your identity.
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If you have followed the scammers’ trade recommendations, contact the trading platform or sharebroker you used to carry out the trades and let them know about the scam.
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If you are getting spam emails and text messages, report these to the Department of Internal Affairs here.
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Tell a trusted relative or friend what has happened. They may help you see the situation more clearly, help you deal with the scammers, and suggest what to do next.
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Contact Victim Support on 0800 842 846 or visit their website. They can provide free emotional and practical support and information.
