SEC Takes Action On Online Brokerage Theft

The 'Securities and Exchange Commission' said it received a large influx of complaints about online account intrusions in the past few months.

At a legal conference in Washington, Walter Ricciardi, 'deputy enforcement director at the U.S. SEC remarked that the computer invasion is a swelling problem, something they are extremely concerned about. In another note, John Stark, 'chief of the regulator's office of internal enforcement' said that the investigations they made in this area were much more than in any other area. According to him, the problem had grown with the presence of spyware and keystroke logging programs that have made such online criminal operations easier.

In the U.S., online investors account for 25% of the entire retail stock trades having set up 10 million online accounts. The crooks use a spy program in a victim's computer to trace the user's activities on the Internet and obtain private information like account numbers and passwords. The program then sends the information back to the crook via e-mail.

The end result is that the thief gains access to the victim's portfolio and then picks up the proceeds to juggle with the stock prices for profit. Although public PCs are more vulnerable, opening an e-mail attachment can compromise home computers also.

Hacker can also use an alternative scheme called "pump" to invade an online account after purchasing a bunch of small, listed companies to dissolve all the securities that the account holds. The hacker then uses the proceeds to buy same companies online in a hop eto raise their stock prices higher.

Mr. Stark informed that after a successful pump, the hacker wires the money out of the country through anonymous wiring services. He further said that investigations are on and there are expectations to bring few cases.

The SEC is working to track down the criminals and increases awareness among online investors. They recommend users to change passwords frequently and never enter personal information in an unfamiliar computer.

Related article: SEC Imposes Trading Ban on 35 Companies

» SPAMfighter News - 10/20/2006