URGENT >> BULLETIN >> MOVING: In a case that raises grave security concerns, the SEC has gone to federal court in San Francisco, alleging that a 34-year-old Latvian trader who held positions in multiple stocks “hijacked” the online accounts of customers at large broker-dealers and made trades in the accounts to manipulate prices and pocket the profits.
Igors Nagaicevs “broke into” the accounts “on more than 150 occasions over the course of 14 months,” the SEC charged, saying the hacking scheme caused more than $2 million in damages and reaped more than $850,000 in illegal profits for the accused fraudster.
“Nagaicevs conducted those unauthorized trades to manipulate the prices of stocks in which he already held a position through one of at least eight unregistered trading firms where Nagaicevs was an authorized trader,” the SEC charged. “The scheme enabled Nagaicevs to consistently derive quick trading profits, even if he manipulated the price of the security by only a small amount.”
A top SEC official described the scheme as massive in terms of its destructive power.
“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors and their brokerage firms,” said Marc J. Fagel, director of the SEC’s San Francisco Regional Office.
The SEC said it also brought administrative proceedings today against four electronic trading firms and eight executives amid allegations they enabled the fraud “by allowing [Nagaicevs] anonymous and unfiltered access to the U.S. markets.”
“These firms provided unfettered access to trade in the U.S. securities markets on an essentially anonymous basis,” said Daniel M. Hawke, chief of the SEC’s Market Abuse Unit. “By failing to register as brokers, the firms and principals in this case exposed U.S. markets to real harm by evading crucial safeguards of the federal securities laws. We will not allow firms like these to fly under the radar and become safe havens for market abuse.”
Read the SEC release.