KUALA LUMPUR: The Malaysian Investors Association (MIA) has lauded Bursa Malaysia’s warning of syndicates preying on investors with “pump and dump” schemes as timely, saying this will ensure that such nefarious activities are exposed early by highlighting their modus operandi.

“These syndicates plan well in advance to nibble and accumulate shares in targeted counters at low entry level prices. They then generate interest to give an appearance of active trading to lend credence to their tips and good news regarding the selected counters. Once the baits are swallowed, they exit the market, leaving tailgating investors with huge financial losses,” the investors group said in a media statement yesterday.

On Tuesday, the stock exchange regulator issued an industry communication letter to all participating organisations — stockbroking companies and investment banks — saying it had discovered certain groups of market participants using social media and the Internet to carry out manipulative schemes via “pump and dump” activities.

MIA also said the early unusual market activity queries issued by Bursa are another proactive step to protect stock market investors as it alerts them to the fact that such a flurry of activities is without solid basis.

“Let the manipulators know their activities are being closely monitored. Let the herd, instinctive buyers of such stocks, beware,” said MIA.

The strict enforcement of the ruling requiring listed companies to release vital information without long delays would also help curb manipulative activities, it said.

“But such information, be it positive or negative, must be true and accurate. In the final analysis, investors will make their own investment decisions, but at least they are furnished with facts and figures to make informed decisions,” the association added.