On March 7, 2007, a federal judge in Washington froze a USD 3 million trading account at a Raleigh securities brokerage that appeared to be involved in a 2-year inquiry into online stock manipulation. According to the Securities and Exchange Commission (SEC), a court order freezing the assets of the account was obtained as it was opened by a European crime ring at Pinnacle Capital Markets in Raleigh. So, trading for 35 companies was suspended.
The crime ring’s members lived in the British Virgin Islands or Europe. From December 2005 to December 2006, they netted USD 733 000 or more in a complicated scheme. Purportedly, the criminal scheme combined hacking with traditional “pump-and-dump” market manipulation. It should be noted here that stock price manipulation goes back to Wall Street’s early days.
The ring’s members allegedly used a technique which is becoming more and more popular with cybercriminals – according to the SEC, the hackers cloaked their electronic footprints by hijacking the Internet protocol addresses of unrelated 3rd parties all over the USA. According to the SEC, these cyberthieves extracted funds from online stock accounts at 7 prominent online brokerage firms.
The money is in 75 accounts kept by Pinnacle using the name of a Latvian bank, JSC Parex Bank. The above-mentioned USD 3 million seems to be the profit the hackers made and the brokerages’ loss to compensate clients.
Chief of the SEC’s Office of Internet Enforcement, John Stark, said the investigation is continuing and the SEC has not talked to any officials at Pinnacle yet.