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U.S. Brokerages On the Net face Hacker attacks

U.S. discount brokerages are spending millions of dollars to repay their clients after high-tech crooks victimized the customers in a recent fraud. The hackers based in Eastern Europe and Asia had infiltrated customer accounts of online brokers, including 'E-Trade Financial Corporation' and 'TD Ameritrade Holding Corporation'. This is one of the most prominent cases of identity theft in U.S securities industry.

The 'Federal Bureau of Investigation', the 'Securities and Exchange Commission' and the 'NASD' are trying to trace the fraud. The New York-based E-Trade has so far spent at least $18 mMillion as a result of this fraud and Ameritrade of Omaha, Neb too has incurred large losses. In an interview Jarrett Lilien, E-Trade's 'Chief Operating Officer' said that the criminals appear to be highly organized, which makes it a bigger issue this quarter.

According to John Walsh, 'chief counsel' in 'SEC's office of compliance inspections and examinations', identity thieves were showing great interest in the securities business with growing sophistication in their attacks.

As per SEC officials, in most of the schemes reported, the miscreants install spyware in a consumer's computer or a public PC to track a user's online behavior and seize critical information such as passwords and account numbers. The software then transmits the stolen data to the thieves who can access the victims' accounts. Alternatively, the cyber thieves can sell off the account information and earn some money. Still more tThey inflate the stock prices for profit by manipulating the hijacked user accounts in "pump and dump" schemes.

Online brokers find it hard to spot the hackers because their operations look as if the actual account holders were performing the transactions. The most popular method to carry out such concentrated attacks is the use of 'botnets' - network of compromised PCs. Hackers apply this technique to gather individuals' personal or corporate info to sell them to crime gangs in other countries who then target those particular companies.

E-Trade has given word it would compensate its customers for the losses they have suffered from the fraud. TD Ameritrade and Schwab have made similar promises, and Fidelity has also followed suit.

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