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U.S. Officials Sue Russian Man for Committing Online Fraud

A Russian citizen is charged with hacking the online brokerage accounts of E*Trade Financial Corp., and TD Ameritrade Holding Corp., so that he could change the prices of scantily traded stocks. Consequently, the United State government froze the man's assets.

Framing a lawsuit, the U.S. Securities and Exchange Commission (SEC) said that Evgeny Gashichev, 41, amassed nearly U.S. $354,000 in illegal capital gains by employing a "high-tech" scheme that affected at least 21 companies.

As an emergency action Manhattan's federal court accused Grand Logistic SA, a Belize corporation based in Estonian capital city Tallinn. It also charged the owner of the company, Evgeny Gashichev for tampering stock prices by unlawfully using online brokerage accounts of several account holders.

To describe Gashichev's tactics the commission said that he would buy shares from a sparsely traded company through his own account. Just after that he would use his victims' accounts to buy huge amounts of the stock, shooting up the value. He would then exploit the artificial demand by selling his shares. He would also make profits by creating a shortage of stocks when the price fell.

According to the commission's complaint Gashichev first deposited $30,000 in the Grand Logistic account. Within seven weeks he churned $353,609 in profits by playing his fraudulent scheme. The complaint said that there were trade in 21 securities between August 28 and October 13. When the stock value rose, Gashichev sold his shares that he purchased earlier and made huge profits. The result was a sharp decline in stock prices while other account holders suffered losses.

Daniel Hawke, administrator of the commission's district office in Philadelphia noted that the SEC has come to know of a sudden increase in intrusions into brokerage accounts. The SEC jointly with other regulators and brokerage firms were working to make sure that safety and security of online brokerage trading prevailed.

Online brokerage E*Trade reported in October this year that it lost $18 million on account of 'pump-and-dump' frauds, in the third quarter alone. Scams also hit TD Ameritrade but no details of losses were disclosed.

Related article: U.S. Businesses Lose $712 Per Worker Due to Spam

ยป SPAMfighter News - 26-12-2006

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