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Some wealthy and famous individuals have the power to influence the stock market simply by posting on social media. For example, a famous billionaire tweets "I'm excited to see what ACME develops this year", and the Acme Corporation's stock price (at least temporarily) goes through the roof.

Now imagine that the billionaire capitalizes on the inflated stock price and sells for a big profit. Is this illegal, and if so what type of fraud would it be classified as? It feels like a pump & dump, but doesn't meet some of the typical criteria for a pump & dump:

  • There is no orchestrated campaign, merely a single social media post
  • The individual in question hasn't made any false / misleading claims
  • The individual in question hasn't advised anyone else to buy the stock
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MARKET MISCONDUCT AND OTHER PROHIBITED CONDUCT RELATING TO FINANCIAL PRODUCTS AND FINANCIAL SERVICES

The Corporations Act deals with this in Part 7.10.

The activity you describe is not an offence.

The closest is that of "Inducing persons to deal* in s1041F but that requires "making or publishing a statement, promise or forecast if the person knows, or is reckless as to whether, the statement is misleading, false or deceptive." You have specifically stated that it isn't false or misleading and I agree with you - a person can be legitimately excited about upcoming product releases.

Now, if the statement goes further with, say "I'm buying ACME stock!" then it is probably crossing the line; particularly if they had no intention of doing so at the current price.

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