A US federal judge acted last week to freeze $3 million in assets from a Latvian-based bank's US trading account allegedly belonging to an Eastern European crime ring accused of orchestrating what the Securities Exchange Commission (SEC) is calling "a modern-day, technological version of the traditional ‘pump-and-dump' market manipulation scheme."The freeze was granted by the Honorable Ricardo Urbina at the request of the SEC pending a preliminary hearing. It stems from an SEC investigation that uncovered a group of foreign-based fraudsters who allegedly hacked into online brokerage accounts from seven different firms, sold off the stocks held within those accounts and funneled the profit from these sells to purchase stock from 15 pre-selected NASDAQ firms in order to manipulate the market.
Investigators with the SEC claim that the unknown criminals had bought into these ‘thinly-traded’ stocks prior to the intrusion and made over $732,000 in profit by selling off their shares once their purchases with the stolen money pumped up their selected stocks temporarily. The illegal actions cost the brokerages over $2 million in losses.
The perpetrators of the scheme remain unknown, the SEC reported.
“In perpetrating their scheme, the defendants masked their identities by
intruding into the online accounts using the Internet Protocol addresses of innocent third parties and by trading anonymously through the domestic brokerage accounts of Latvian-based Relief Defendant JSC Parex Bank,” SEC lawyers wrote in their official complaint.
Now that the assets are frozen, the SEC is asking the court to order Parex Bank to hand over the frozen $3 million, as part of a collection of ill-gotten gains as well as prejudgment interest and civil penalties.