In Hi-Tech Market Manipulation Case By Unknown Traders, Securities and Exchange Commission Freezes $3 Million To Protect Brokerage Firms

On March 6, 2007, The U.S. District Court for the District of Columbia froze $3 million in an account under the name of a Latvian bank. The SEC said unknown traders used the money last year for a “hi-tech market manipulation scheme”. According to the Commission, the action is the largest freeze secured for an intrusion-related market manipulation scheme.

The SEC says that the assets had been placed in an omnibus brokerage account at Pinnacle Capital Markets LLC. The unidentified account owners are based in Russia, the British Virgin Islands, Latvia, and Lithuania-but the account was under the name of JSC Parex Bank, a Latvian bank that the SEC has named as a relief defendant in the SEC action.

The Commission says that unknown traders hacked into investor accounts at online brokerages, sold off clients’ existing positions, and used the money they made to bid up the market for specific stocks that they wanted to manipulate. These traders made at least $732,000 with their alleged pump-and-dump scheme, costing brokerage firms about $2 million.

An investor alert has been posted online by the SEC’s Office of Investor Education and Assistance. The SEC Web site is also providing tips to help investors avoid becoming victims of online intrusion. It is interesting to see the difference between how the SEC acts to protect brokerage firms and what it will do for investors.

When nearly $ 2 Million was lost in more than 40 accounts at brokerage firms including Charles Schwab, E*Trade, Fidelity, Merrill Lynch, Scottrade, TD Ameritrade and Vanguard, the Securities and Exchange Commission came quickly to their rescue! Observers remark that such a rapid response by the SEC almost never occurs when the assets of investors are at risk. (The SEC was created decades ago with the central purpose of protecting investors).

This is why it is important to retain the services of an attorney to help you recover your losses, if you are an investor who has been a victim of investor fraud. Shepherd Smith and Edwards has helped many investors who have lost their money from pump-and-dump schemes and other kinds of market manipulation scams. Your first consultation is free if you contact us online.