Feeds

Stock scammer gets coal for the holidays

Illicit use of victims' brokerage accounts

Choosing a cloud hosting partner with confidence

The US Securities and Exchange Commission put a suspected Russian brokerage-account thief's money on ice last week, after he allegedly used illicit access to people's online portfolios to drive up stock prices.

The SEC charged Grand Logistic SA, a Belize corporation located in Estonia, and its owner Evgeny Gashichev of Russia, with breaking into victims' computers and using the illicit access to their brokerage accounts to drive up stock prices. Between August 28 and October 13, 2006, the illegal scheme made the company at least $353,609, according to an SEC estimate.

Unlike stock spam, which generally results in modest gains for the fraudsters, the illicit use of victim's stock accounts resulted in massive increases, according to the SEC's court filings.

"This is the lazy man's pump-and-dump," Amy J. Greer, district trial counsel for the Philadelphia District Office of the SEC, told SecurityFocus. "It doesn't require them to tout anything."

Stock scams and account intrusion have become increasingly popular schemes for cybercriminals intent on turning a profit. An increase in spam e-mail emanating from bot nets has partially been due to bulk email messages touting stocks as part of a typical scheme to drive up prices. Studies have shown that stock spam can result in an increase in stock price, bumping up the value of volatile over-the-counter stocks by 1.5 to five per cent.

The U.S. Securities and Exchange Commission prosecuted its first account intruder in 2004, when 20-year-old Van T. Dinh was found guilty of compromising a victim's computer and using the account to buy Dinh's $90,000 in "put" options that had become worthless. In October, two US brokerage firms - TD Ameritrade and E*Trade Financial -announced that such scams resulted in more than $22 million in losses in the third quarter of 2006.

In the latest scheme, labeled by the SEC as a "high-tech version of a 'pump-and-dump' manipulation scheme," Grand Logisitics allegedly bought stock in 21 different companies and then used buy orders placed through compromised accounts to drive up the price of those firms' stock.

"These purchases through the intruded accounts created buying pressure and the false appearance of legitimate trading activity, which caused the price of the targeted stock to greatly increase," the SEC stated in court filings. "Once the price had increased, Gashichev then sold, at a profit, the shares he had earlier purchased in the Grand Logistic account."

The scheme was lucrative, according to the SEC.

Choosing thinly-traded penny stocks--in every case the stock traded as less than $1.50 a share - Gashichev allegedly purchased anywhere between 6,000 and 71,000 shares of the targeted stock. The suspect then used access to compromised accounts at E*Trade Securities, TD Ameritrade, Scottrade and other online brokerages to sell existing assets and use the proceeds to buy the targeted stock, according to the SEC filings. By the time the suspect sold the stock, typically on the same day, the price had increased anywhere from four per cent to 158 per cent, the SEC stated.

Beginner's guide to SSL certificates

More from The Register

next story
FYI: OS X Yosemite's Spotlight tells Apple EVERYTHING you're looking for
It's on by default – didn't you read the small print?
Russian hackers exploit 'Sandworm' bug 'to spy on NATO, EU PCs'
Fix imminent from Microsoft for Vista, Server 2008, other stuff
Microsoft pulls another dodgy patch
Redmond makes a hash of hashing add-on
'LulzSec leader Aush0k' found to be naughty boy not worthy of jail
15 months home detention leaves egg on feds' faces as they grab for more power
Kill off SSL 3.0 NOW: HTTPS savaged by vicious POODLE
Pull it out ASAP, it is SWISS CHEESE
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
China is ALREADY spying on Apple iCloud users, watchdog claims
Attack harvests users' info at iPhone 6 launch
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.