KUALA LUMPUR (March 21): The Securities Commission Malaysia (SC) today issued a warning to investors over the increased use of blogs, forums and social media platforms to spread false and misleading information on certain companies in order to perpetrate 'pump and dump' schemes.

Perpetrators would accumulate shares at lower prices before posting positive sentiments about the companies, with the intention to spur interest in the shares in order to drive up its price.

When unsuspecting investors buy the shares, it gives the perpetrators an opportunity to sell the shares they hold at a profit. Investors who have bought shares at the inflated price will suffer losses when the hype eases.

In a statement today, SC said the commission and Bursa Malaysia recently identified a blog 'Bonescythe Stock Watch' that published various articles containing statements and forecasts that were misleading and deceptive, an offence under the Capital Markets and Services Act 2007.

The blog has been removed following SC's intervention action, it said.

"The SC advises investors to always exercise diligence and verify the legitimacy of information before making an investment decision.

"Investors are reminded to be cautious of the risk of fraud and when in doubt, to seek advice from persons who have been licensed by the SC," the regulator said.

SC suggested investors to always question the intention of anyone who gives free investment advice, differentiate fact from rumour, carry out own research and check with the regulator.

Today's statement from SC comes a year after Bursa Malaysia told stockbroking companies and investment banks that it had discovered certain groups of market participants using social media and the Internet to carry out manipulative schemes via "pump and dump" activities.