SEC Takes Action Against Latvian Hacker

wiredmikey writes "The SEC has filed charges against a trader in Latvia for conducting a widespread online account intrusion scheme in which he manipulated the prices of more than 100 NYSE and Nasdaq securities by making unauthorized purchases or sales from hijacked brokerage accounts. The SEC also went after four online trading firms and eight executives who are said to have helped the hacker make more than $850,000 in ill-gotten funds. The SEC's actions occurred on the same day that the Financial Industry Regulatory Authority (FINRA) issued an investor alert and a regulatory notice about an increase in financially motivated attacks targeting email."

Comments

More Details and GBX Stock Example

[eldavojohn]

It was really clear to me how he was precisely doing this for his own gain but here's a PDF of the 15 page court proceedings that goes into detail (section B is the informative part). Essentially within one single trading day he would establish a long or short position through one of the unregistered trading firms. Then in that day he would gain illegal access and, if he had to, sell securities to beef up the cash in the account and then make trades that would cause his long or short to payoff. Then he'd pull it all out from the original account. He would often complete this cycle in 15 to 20 minutes and, as a result, he'd often be responsible for more than 50% of that stock's trading volume for that day. It's interesting, they go in to the details of a GBX stock and how the price changes are 10 to 50 cents (on ~$10 per stock).