Chinese Microcap IPO Scams Bleed Thousands of US Investors

U.S. investors are increasingly falling victim to sophisticated stock scams involving small Chinese companies that go public on Nasdaq only to experience dramatic price crashes shortly after, often following aggressive online promotions. These schemes, frequently involving pump-and-dump operations, lure investors through social media ads and fake financial advisers, promising high returns on obscure microcap IPOs such as Jayud Global Logistics and China Liberal Education. Victims, including ordinary individuals like college professor Braden Lindstrom, have suffered significant losses, with some groups reporting total damages exceeding $9 million. U.S. regulators, including the Justice Department and Finra, have intensified efforts to combat this fraud by accelerating delistings of underperforming stocks and investigating manipulative trading activities. Meanwhile, Meta is testing tools to block deceptive stock advertisements to protect investors. Similar fraudulent tactics are also reported in South Korea, where scammers use fake pre-IPO shares to trick retail investors into investing in nonexistent companies, prompting warnings from financial authorities to exercise caution with unsolicited pre-IPO offers.