Feeds

Feds sue Russian for stock pump and dump hack

Hijacked accounts = easy money

Build a business case: developing custom apps

The US Securities and Exchange Commission accused a Russian man of earning more than $255,000 in illegal stock sales by using hijacked brokerage accounts to artificially manipulate the price of shares in more than three dozen companies.

Valery Maltsev used a legitimate account to buy positions in 38 thinly traded stocks, and then use compromised brokerage accounts to buy or sell huge numbers of the same companies, agency attorneys alleged. The 36-year-old resident of St Petersburg, Russia would then turn around and sell his holdings at a sizeable premium, according to a lawsuit filed in US District Court in Manhattan.

The scheme earned at least $255,532 from August to December at a cost of $603,000 to broker-dealers, which had to reimburse customers. Maltsev, who is the president and only officer of a company called BroCo Investments, has tried to withdraw $310,000 out of his account at Genesis Securities and have the money wired to a bank in Cyprus. Genesis has not yet processed the requests.

The lawsuit seeks an order freezing the Genesis accounts and requiring Maltsev to repay the lost funds.

To appreciate the havoc the scheme wreaked on some stocks, consider the following: Between December 1 and December 20, AmeriServe Financial (ticker ASRV) traded an average of about 11,300 shares per day. Then on December 21 - the same day Maltsev allegedly executed his manipulation scheme - trading volume skyrocketed to 277,567 shares, thanks largely to purchases made by three compromised accounts from Scottrade.

In less than a half-hour's time, Maltsev was able to earn $17,760, first by driving up the price of the stock and selling 6,500 shares at an artificially high price, and then, once the sell-off began, selling another 80,000 short positions he had at artificially low prices. Short positions are trades that bet a security will decrease in value.

"The unauthorized purchase and sale orders in the intruded accounts during the ASRV intrusion resulted in losses of $20,355.63 to the holders of the intruded accounts," the complaint states. "In addition, Maltsev's manipulative trading caused damage to market participants who purchased shares of ASRV during the intrusion period."

The SEC action is only the latest to take aim at stock manipulation schemes that exploit hijacked brokerage accounts. In 2007, the agency targeted at least four men in two separate actions. ®

Endpoint data privacy in the cloud is easier than you think

More from The Register

next story
14 antivirus apps found to have security problems
Vendors just don't care, says researcher, after finding basic boo-boos in security software
'Things' on the Internet-of-things have 25 vulnerabilities apiece
Leaking sprinklers, overheated thermostats and picked locks all online
iWallet: No BONKING PLEASE, we're Apple
BLE-ding iPhones, not NFC bonkers, will drive trend - marketeers
Multipath TCP speeds up the internet so much that security breaks
Black Hat research says proposed protocol will bork network probes, flummox firewalls
Only '3% of web servers in top corps' fully fixed after Heartbleed snafu
Just slapping a patched OpenSSL on a machine ain't going to cut it, we're told
Microsoft's Euro cloud darkens: US FEDS can dig into foreign servers
They're not emails, they're business records, says court
Plug and PREY: Hackers reprogram USB drives to silently infect PCs
BadUSB instructs gadget chips to inject key-presses, redirect net traffic and more
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?