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The Securities and Exchange Commission last week began civil and criminal proceedings against a teenager who allegedly broke into someone else's brokerage account to dump his falling stock options.

Van Dinh, 19, of Phoenixville, Pennsylvania, is accused of disguising a key logger program (called The Beast) as a new stock-charting tool, which he promoted in chatroom for investors. The program enabled him to monitor the computer activity of anyone who ran the malware.

Using this trick, Dinh allegedly obtained the login and password of a TD Waterhouse broker and placed orders for 7,200 soon-to-be worthless Cisco stock option contracts.

According to the SEC’s civil complaint, Dinh avoided a potential $37,000 loss on the Cisco options using the ruse.

The investor (whose home PC was compromised) contacted the authorities when he found his account had been cleaned out to pay for worthless stock options. Dinh, despite using a variety of tricks in an attempt to cover his tracks, was located within a few days.

The SEC has joined the US Attorney’s office in Massachusetts in bringing criminal charges of identity theft, computer hacking, securities, mail and wire fraud against Dinh.

He could face up to 20 years' imprisonment on the fraud and 10 years for the computer crime offences, according to US reports. ®

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