Finfluencer Gabriel Govinda gets prison sentence for market manipulation
The Australian Securities and Investments Commission (ASIC) today confirmed that Gabriel Govinda (known online as ‘Fibonarchery’) has been sentenced to two and a half years imprisonment to be released immediately on a 5 year recognisance in the amount of $5,000 and fined $42,840.
Govinda had pleaded guilty to 23 charges of manipulation of shares listed on the Australian Securities Exchange and 19 charges of illegal dissemination of information relating to the manipulation.
The Court considered Mr Govinda’s posts on HotCopper about his market manipulation activity to be a breach of s1041D of the Corporations Act. This is the first time a person has been sentenced under this provision.
Between September 2014 to July 2015, Mr Govinda used 13 different share trading accounts, held in the names of friends and relatives, to manipulate the share price of 20 different listed stocks. Mr Govinda manipulated the market, contrary to s1041B of the Corporations Act, by:
- trading between the accounts he controlled (wash trading);
- using fake, ‘prop’, or ‘dummy’ bids to falsely increase the perceived demand, and ultimate price, for listed stocks.
Mr Govinda also illegally disseminated information about his wash trades and dummy bids on HotCopper. He was seeking to increase (or pump) the share price, then selling (or dumping) the listed stocks at a higher price. This is often referred to as ‘pump and dump’.
Mr Govinda used a pump and dump approach to manipulate smaller, less expensive companies listed on the ASX which allowed him to influence, and therefore benefit most, from price increases.
During ASIC’s search of Mr Govinda’s premises in 2015, a notepad was found which detailed his use of HotCopper to promote his market manipulation. The note read, ‘Buy big parcels of small cap cash backed resource shares at reasonable price, alert H.C Daytraders to the action sell to them at higher price at end of day.’ It also read ‘sell to self to create illusion of volume’ and ‘sell stock down to yourself then buy stock up to yourself. Buy cheap, make it expensive again, sell to others.’
The Commonwealth Director of Public Prosecutions prosecuted the matter after a referral from ASIC.