1 00:00:03,930 --> 00:00:06,299 Sean Aylmer: Welcome to the Fear and Greed business interview. I'm Sean 2 00:00:06,300 --> 00:00:10,109 Sean Aylmer: Aylmer. There seems to be an endless stream of get- rich- 3 00:00:10,110 --> 00:00:13,109 Sean Aylmer: quick schemes, which is kind of surprising because I'm not 4 00:00:13,110 --> 00:00:15,989 Sean Aylmer: sure I've ever met anyone getting rich quick using one 5 00:00:15,990 --> 00:00:19,079 Sean Aylmer: of those schemes anyway. Investing is almost always a long- 6 00:00:19,109 --> 00:00:21,930 Sean Aylmer: term game, and anyone laying down their hard- earned cash 7 00:00:21,930 --> 00:00:25,470 Sean Aylmer: should familiarize themselves with the different rules of investing and 8 00:00:25,470 --> 00:00:29,460 Sean Aylmer: the associated risks. Importantly, don't believe the hype around an 9 00:00:29,460 --> 00:00:32,040 Sean Aylmer: investment. If it sounds too good to be true, well, 10 00:00:32,040 --> 00:00:35,519 Sean Aylmer: it probably is. The corporate regulator, the Australian Securities and 11 00:00:35,519 --> 00:00:39,450 Sean Aylmer: Investments Commission, last week launched a consumer campaign to raise 12 00:00:39,450 --> 00:00:42,720 Sean Aylmer: awareness of the risks associated with investment hype, to coincide 13 00:00:42,720 --> 00:00:45,598 Sean Aylmer: with the Australian release of Dumb Money, a new film 14 00:00:45,598 --> 00:00:49,080 Sean Aylmer: about the GameStop short squeeze episode a couple of years 15 00:00:49,080 --> 00:00:52,499 Sean Aylmer: ago. It provides an opportunity to have a chat about 16 00:00:52,500 --> 00:00:56,400 Sean Aylmer: investment scams with Calissa Aldridge, Executive Director of Markets at 17 00:00:56,400 --> 00:00:58,410 Sean Aylmer: ASIC. Calissa, welcome to Fear and Greed. 18 00:00:59,040 --> 00:01:00,330 Calissa Aldridge: Thanks, Sean. I'm happy to be here. 19 00:01:00,690 --> 00:01:02,730 Sean Aylmer: So just very quick, for those who don't know the 20 00:01:02,730 --> 00:01:06,059 Sean Aylmer: GameStop story because it's kind of an interesting tale, very 21 00:01:06,059 --> 00:01:08,010 Sean Aylmer: briefly, what was it exactly? 22 00:01:08,849 --> 00:01:11,129 Calissa Aldridge: It's a story about hype, I guess at its essence. 23 00:01:11,129 --> 00:01:14,430 Calissa Aldridge: A number of retail investors who got together and decided 24 00:01:14,430 --> 00:01:18,030 Calissa Aldridge: that hedge funds and others had taken too big a 25 00:01:18,030 --> 00:01:21,990 Calissa Aldridge: short positions against a company called GameStop, and they decided 26 00:01:21,990 --> 00:01:24,720 Calissa Aldridge: that they would try to push up the price of 27 00:01:24,780 --> 00:01:27,509 Calissa Aldridge: that stock, which would mean that those hedge funds would 28 00:01:27,569 --> 00:01:30,810 Calissa Aldridge: essentially be squeezed and force them to purchase back the 29 00:01:30,840 --> 00:01:33,150 Calissa Aldridge: stock at much higher prices. Which is the outcome that 30 00:01:33,150 --> 00:01:35,190 Calissa Aldridge: they had, and I think probably much more successful than 31 00:01:35,190 --> 00:01:38,910 Calissa Aldridge: they intended, with prices going up by about 2, 000%. 32 00:01:38,940 --> 00:01:42,839 Sean Aylmer: Okay. I want to dig into that in a moment, 33 00:01:42,840 --> 00:01:48,330 Sean Aylmer: but let's get 101 here. So for retail investors, what 34 00:01:48,330 --> 00:01:50,610 Sean Aylmer: are some of the main rules they should be following 35 00:01:51,120 --> 00:01:51,870 Sean Aylmer: when investing? 36 00:01:52,770 --> 00:01:54,660 Calissa Aldridge: Well, not so much about the rules, but just some 37 00:01:54,660 --> 00:01:57,000 Calissa Aldridge: of the main practices that they should be following. I 38 00:01:57,000 --> 00:02:00,479 Calissa Aldridge: think really to avoid the hype, be really careful about 39 00:02:00,480 --> 00:02:04,529 Calissa Aldridge: where they're getting their information from and what the interests 40 00:02:04,529 --> 00:02:07,050 Calissa Aldridge: of the other parties might be when they're investing. But 41 00:02:07,050 --> 00:02:09,930 Calissa Aldridge: they do need to make sure they're careful to not 42 00:02:09,930 --> 00:02:13,200 Calissa Aldridge: use information that they might've received through channels that might 43 00:02:13,200 --> 00:02:16,320 Calissa Aldridge: amount to incite information, for example. But in this case, 44 00:02:16,620 --> 00:02:21,570 Calissa Aldridge: if you're actively participating and encouraging others to invest in 45 00:02:21,570 --> 00:02:25,919 Calissa Aldridge: a way with an intention of influencing prices, that may 46 00:02:25,919 --> 00:02:28,560 Calissa Aldridge: amount to market manipulation, which is a criminal offense in Australia. 47 00:02:29,370 --> 00:02:32,728 Sean Aylmer: Okay. I mean, just getting into that GameStop detail, when 48 00:02:32,730 --> 00:02:37,049 Sean Aylmer: a professional investor is shorting a stock, essentially they're betting 49 00:02:37,049 --> 00:02:40,048 Sean Aylmer: that the stock will go down. And as you explained, 50 00:02:40,379 --> 00:02:44,880 Sean Aylmer: you had retail investors, they had the ability to push 51 00:02:44,880 --> 00:02:48,899 Sean Aylmer: the price up. How did they do that? How do retail 52 00:02:48,900 --> 00:02:49,770 Sean Aylmer: investors do that? 53 00:02:50,669 --> 00:02:54,120 Calissa Aldridge: In this example, the use of social media. Somebody who 54 00:02:54,120 --> 00:02:56,490 Calissa Aldridge: had a lot of followers and then they just gained 55 00:02:56,490 --> 00:02:59,609 Calissa Aldridge: a lot of momentum, and they all started trading around 56 00:02:59,609 --> 00:03:01,770 Calissa Aldridge: the same time in the same direction and were able 57 00:03:01,770 --> 00:03:05,040 Calissa Aldridge: to push the price up by continuing to put orders 58 00:03:05,040 --> 00:03:08,010 Calissa Aldridge: in the market at higher prices. And as I said, 59 00:03:08,010 --> 00:03:11,460 Calissa Aldridge: the price went up really significantly and it resulted in 60 00:03:11,460 --> 00:03:13,799 Calissa Aldridge: significant losses, not just for the hedge funds that might've 61 00:03:13,799 --> 00:03:16,559 Calissa Aldridge: had short positions, but also for a range of other 62 00:03:16,559 --> 00:03:18,299 Calissa Aldridge: investors who bought on the way up or at the 63 00:03:18,300 --> 00:03:21,840 Calissa Aldridge: top, because the price came down quite significantly and will 64 00:03:21,840 --> 00:03:23,250 Calissa Aldridge: have lost out when it came back down. 65 00:03:24,600 --> 00:03:26,909 Sean Aylmer: Okay, so GameStop is an extreme. Does that sort of thing happen 66 00:03:27,030 --> 00:03:28,109 Sean Aylmer: on the Australian market? 67 00:03:28,800 --> 00:03:32,008 Calissa Aldridge: It can. And so back during that GameStop period, we did 68 00:03:32,008 --> 00:03:35,519 Calissa Aldridge: have a range of these incidents happening here. Actually towards 69 00:03:35,520 --> 00:03:38,610 Calissa Aldridge: the end of 2021 it was, where we saw really 70 00:03:39,000 --> 00:03:42,990 Calissa Aldridge: concerted efforts to pump and dump on ASX listed securities, 71 00:03:42,990 --> 00:03:45,780 Calissa Aldridge: to the point that there were a number of forums 72 00:03:45,780 --> 00:03:49,800 Calissa Aldridge: on different social media channels called " ASX pump and dump," 73 00:03:50,070 --> 00:03:53,459 Calissa Aldridge: where they were very explicit with naming specific entities that 74 00:03:53,459 --> 00:03:56,640 Calissa Aldridge: they wanted to target, what price they wanted to hit, 75 00:03:56,640 --> 00:03:59,550 Calissa Aldridge: and when they would commence the buying or the placement 76 00:03:59,550 --> 00:04:02,340 Calissa Aldridge: of orders. So it was very, very explicit. We took 77 00:04:02,340 --> 00:04:04,260 Calissa Aldridge: some action back then, which was the first time for 78 00:04:04,260 --> 00:04:07,380 Calissa Aldridge: us at the time to enter those chat rooms and 79 00:04:07,380 --> 00:04:10,290 Calissa Aldridge: provide warnings to those people who are part of it, 80 00:04:10,529 --> 00:04:13,080 Calissa Aldridge: that this is potentially criminal action activity and that they 81 00:04:13,080 --> 00:04:16,470 Calissa Aldridge: need to be very careful. But also just on GameStop 82 00:04:16,470 --> 00:04:19,320 Calissa Aldridge: itself, an interesting fact I'm not sure many people are 83 00:04:19,320 --> 00:04:21,630 Calissa Aldridge: aware of, is its ticket code that you trade on 84 00:04:21,630 --> 00:04:24,450 Calissa Aldridge: in New York Stock Exchange is GME. In Australia we 85 00:04:24,450 --> 00:04:27,508 Calissa Aldridge: have a company GME Resources that has the same ticker 86 00:04:27,509 --> 00:04:29,849 Calissa Aldridge: code, and we saw a significant increase in its share 87 00:04:29,850 --> 00:04:33,630 Calissa Aldridge: price because many Australian investors thought they were participating in 88 00:04:33,630 --> 00:04:36,599 Calissa Aldridge: the GameStop movement, but actually they were buying into a 89 00:04:36,600 --> 00:04:40,109 Calissa Aldridge: local resource company here. So the confusion buying into things 90 00:04:40,110 --> 00:04:43,378 Calissa Aldridge: that you don't fully understand, that confusion resulted in losses 91 00:04:43,380 --> 00:04:45,808 Calissa Aldridge: for investors in our domestic market who bought into the 92 00:04:45,809 --> 00:04:46,440 Calissa Aldridge: wrong company. 93 00:04:46,889 --> 00:04:55,919 Sean Aylmer: Stay with me, Calissa, we'll be back in a minute. My guest today 94 00:04:55,920 --> 00:05:00,359 Sean Aylmer: is Calissa Aldridge, Executive Director of Markets at ASIC. Is 95 00:05:00,360 --> 00:05:05,039 Sean Aylmer: that sort of behavior very prevalent, an example of the 96 00:05:05,490 --> 00:05:08,789 Sean Aylmer: pump and dump scams, but what other sort of scams 97 00:05:08,790 --> 00:05:11,910 Sean Aylmer: are you seeing on the local market here? 98 00:05:13,500 --> 00:05:15,630 Calissa Aldridge: I wouldn't say that that's pervasive. I think we certainly 99 00:05:15,630 --> 00:05:18,928 Calissa Aldridge: saw quite a lot of it during that period of 100 00:05:18,928 --> 00:05:21,359 Calissa Aldridge: time. We don't see a huge amount of it now, 101 00:05:21,360 --> 00:05:24,509 Calissa Aldridge: but it's still there, particularly in some of the smaller 102 00:05:24,719 --> 00:05:28,589 Calissa Aldridge: cap securities where there's less liquidity and it can be 103 00:05:28,589 --> 00:05:31,080 Calissa Aldridge: a little bit easier to move prices around. The other 104 00:05:31,080 --> 00:05:33,659 Calissa Aldridge: thing we've seen for a long time but I think 105 00:05:33,660 --> 00:05:38,130 Calissa Aldridge: social media probably makes it easier, is just hyping companies 106 00:05:38,130 --> 00:05:40,919 Calissa Aldridge: and fake news. So sharing of fake news, trying to 107 00:05:41,219 --> 00:05:45,839 Calissa Aldridge: encourage other people to participate in investments, plus a range 108 00:05:45,839 --> 00:05:49,620 Calissa Aldridge: of other related scams related to financial markets. We see 109 00:05:49,980 --> 00:05:53,010 Calissa Aldridge: quite a number of what we call imposter bond scams 110 00:05:53,010 --> 00:05:57,420 Calissa Aldridge: at the moment in fake prospectuses, where they're using legitimate 111 00:05:57,509 --> 00:06:00,449 Calissa Aldridge: material or it appears to be legitimate material and companies 112 00:06:00,450 --> 00:06:03,210 Calissa Aldridge: that are very well known, to try to encourage investors 113 00:06:03,210 --> 00:06:06,000 Calissa Aldridge: to buy into something that ultimately ends up being a fake. 114 00:06:07,170 --> 00:06:09,990 Sean Aylmer: In that instance, so it might be a large cap, 115 00:06:10,589 --> 00:06:12,330 Sean Aylmer: let's call it ABC, we won't put anyone on the 116 00:06:12,330 --> 00:06:16,049 Sean Aylmer: spot there, and they're issuing, well, apparently the prospectus says 117 00:06:16,049 --> 00:06:19,799 Sean Aylmer: they're issuing bonds, and people are buying those bonds which 118 00:06:19,829 --> 00:06:22,079 Sean Aylmer: turn out to be fake bonds or in fact no 119 00:06:22,079 --> 00:06:23,219 Sean Aylmer: bonds at all. Is that what you're saying? 120 00:06:23,339 --> 00:06:25,950 Calissa Aldridge: Yeah. The case of the prospectuses issuing different types of 121 00:06:25,950 --> 00:06:29,700 Calissa Aldridge: securities, and the bond scam ones are around buying directly 122 00:06:29,700 --> 00:06:32,639 Calissa Aldridge: into bonds. That's right. And they are very well- known 123 00:06:32,639 --> 00:06:34,559 Calissa Aldridge: companies. So there are a lot of investors who will have 124 00:06:34,559 --> 00:06:39,150 Calissa Aldridge: confidence in those companies, and even though the returns look 125 00:06:39,510 --> 00:06:44,219 Calissa Aldridge: better than investors might otherwise expect, they're not so significant 126 00:06:44,250 --> 00:06:47,130 Calissa Aldridge: that it looks like an obvious scam. We're seeing more 127 00:06:47,130 --> 00:06:49,800 Calissa Aldridge: and more of those sorts of scams, in addition to 128 00:06:50,160 --> 00:06:53,759 Calissa Aldridge: just that constant cycle of people chasing get- rich- quick 129 00:06:54,089 --> 00:06:57,390 Calissa Aldridge: initiatives. So there's a heap of scams around crypto, for 130 00:06:57,390 --> 00:07:02,219 Calissa Aldridge: example, and our data shows that there's a really significant 131 00:07:02,220 --> 00:07:07,320 Calissa Aldridge: proportion, particularly of younger investors, who do own crypto. Our 132 00:07:07,320 --> 00:07:10,289 Calissa Aldridge: survey that we ran last year for under 25- year- 133 00:07:10,289 --> 00:07:13,410 Calissa Aldridge: olds showed that 10% of Australian investors are within that 134 00:07:13,410 --> 00:07:15,929 Calissa Aldridge: under 25- year- old category, and around a third of 135 00:07:15,930 --> 00:07:19,560 Calissa Aldridge: them are investing in crypto. And many of them may 136 00:07:19,560 --> 00:07:22,260 Calissa Aldridge: be buying crypto and holding it, that many others we 137 00:07:22,260 --> 00:07:25,469 Calissa Aldridge: know are getting caught in crypto related scams. 138 00:07:25,950 --> 00:07:28,529 Sean Aylmer: Okay, a couple of things. How do you stop yourself 139 00:07:28,529 --> 00:07:32,100 Sean Aylmer: being scammed? Are there just a few basic steps you 140 00:07:32,100 --> 00:07:36,360 Sean Aylmer: should do if you get an unsolicited prospectus from a 141 00:07:36,360 --> 00:07:39,750 Sean Aylmer: major bank, for example, or someone trying to sell you Bitcoin? 142 00:07:40,470 --> 00:07:44,340 Calissa Aldridge: Yeah, absolutely. Don't click on anything that might be sent 143 00:07:44,340 --> 00:07:46,860 Calissa Aldridge: to you or don't respond if you're getting cold calls 144 00:07:47,190 --> 00:07:49,860 Calissa Aldridge: over the phone or text messages. If you see something 145 00:07:49,860 --> 00:07:52,320 Calissa Aldridge: that might be of interest, go to the actual website and 146 00:07:52,320 --> 00:07:54,360 Calissa Aldridge: make sure you're clicking onto the original website of the 147 00:07:54,360 --> 00:07:58,080 Calissa Aldridge: entity and try to find the documentation on their websites. 148 00:07:58,080 --> 00:08:00,630 Calissa Aldridge: Look for things like phone numbers, are they the same 149 00:08:00,630 --> 00:08:02,969 Calissa Aldridge: phone numbers. Or if they're asking you to deposit money 150 00:08:02,969 --> 00:08:06,119 Calissa Aldridge: into certain bank accounts, just check that those sorts of 151 00:08:06,210 --> 00:08:09,120 Calissa Aldridge: details look as though they're legitimate. And if all else 152 00:08:09,120 --> 00:08:13,020 Calissa Aldridge: fails, you can always try calling the entity itself and 153 00:08:13,020 --> 00:08:14,850 Calissa Aldridge: asking them if it's a legitimate offer. 154 00:08:15,599 --> 00:08:17,940 Sean Aylmer: Okay. What about the role of influencers? And so the 155 00:08:17,940 --> 00:08:21,360 Sean Aylmer: GameStop is an example where they weren't even high- profile 156 00:08:21,360 --> 00:08:24,359 Sean Aylmer: influencers so it just seemed to gather a crowd with them. 157 00:08:24,900 --> 00:08:27,780 Sean Aylmer: We've had people as high profile as Kim Kardashian paying 158 00:08:27,780 --> 00:08:33,001 Sean Aylmer: fines about promoting things, which perhaps she wasn't totally (inaudible) 159 00:08:33,001 --> 00:08:36,780 Sean Aylmer: with. How dangerous is that, I suppose, for influencers 160 00:08:37,139 --> 00:08:41,489 Sean Aylmer: to be spruiking investments and to be listening, or for 161 00:08:41,490 --> 00:08:42,449 Sean Aylmer: people to be listening to those people? 162 00:08:42,929 --> 00:08:45,480 Calissa Aldridge: Yeah, this is happening. This is happening a lot, and 163 00:08:45,480 --> 00:08:48,208 Calissa Aldridge: I think there's a range of different influencers. I think 164 00:08:48,210 --> 00:08:51,240 Calissa Aldridge: there are some, so in the Kim Kardashian example, where 165 00:08:52,349 --> 00:08:55,169 Calissa Aldridge: different people might have different views about her experience and 166 00:08:55,170 --> 00:08:58,199 Calissa Aldridge: understanding of the various things that she's spruiking. And there 167 00:08:58,199 --> 00:09:01,800 Calissa Aldridge: are others who talk very knowledgeably about the information or 168 00:09:01,800 --> 00:09:06,150 Calissa Aldridge: the products that they're recommending or encouraging people to get 169 00:09:06,150 --> 00:09:09,360 Calissa Aldridge: involved in. And some of them might even be licensed 170 00:09:09,450 --> 00:09:11,610 Calissa Aldridge: and really have a real basis for making some of 171 00:09:11,610 --> 00:09:14,609 Calissa Aldridge: the comments. Clearly, there's been lots of really great information 172 00:09:14,610 --> 00:09:16,109 Calissa Aldridge: that is out there as well. I think during a 173 00:09:16,109 --> 00:09:19,828 Calissa Aldridge: period of time during that pandemic period, we had a 174 00:09:20,070 --> 00:09:24,090 Calissa Aldridge: really significant influx of new retail investors to markets, and 175 00:09:24,090 --> 00:09:26,520 Calissa Aldridge: it was really important for them to access information quickly 176 00:09:26,520 --> 00:09:29,010 Calissa Aldridge: and learn about the way that markets function and the 177 00:09:29,010 --> 00:09:31,380 Calissa Aldridge: rest of it. And that's been a real benefit. But 178 00:09:31,380 --> 00:09:34,800 Calissa Aldridge: also just assume that everything that you're hearing from influencers, 179 00:09:35,250 --> 00:09:37,319 Calissa Aldridge: that they might have an ulterior motive in giving you 180 00:09:37,320 --> 00:09:41,550 Calissa Aldridge: that information. They may be paid for referrals, they may have 181 00:09:41,550 --> 00:09:45,780 Calissa Aldridge: an interest directly in whatever it is they're encouraging investors 182 00:09:45,780 --> 00:09:48,599 Calissa Aldridge: to get involved in, so they might benefit from any 183 00:09:48,599 --> 00:09:52,950 Calissa Aldridge: price increases. I think just apply that sort of logic 184 00:09:52,980 --> 00:09:55,679 Calissa Aldridge: to any investment decisions and always go away and do 185 00:09:55,890 --> 00:09:59,370 Calissa Aldridge: your own research. And we say our Moneysmart website is 186 00:09:59,370 --> 00:10:00,540 Calissa Aldridge: a really great place to start. 187 00:10:01,170 --> 00:10:03,090 Sean Aylmer: Calissa, thank you for talking to Fair and Greed. 188 00:10:03,660 --> 00:10:04,320 Calissa Aldridge: Thanks for having me. 189 00:10:04,800 --> 00:10:08,040 Sean Aylmer: That was Calissa Aldridge, Executive Director of Markets at ASIC. 190 00:10:08,099 --> 00:10:10,109 Sean Aylmer: This is the Fair and Greed business interview. Join us 191 00:10:10,109 --> 00:10:12,299 Sean Aylmer: every morning for the full episode of Fear and Greed, 192 00:10:12,330 --> 00:10:15,780 Sean Aylmer: Australia's best business podcast. I'm Shauna Aylmer, enjoy your day.