WASHINGTON, March 8 (UPI) -- Overseas thieves hacked into dozens of online brokerage accounts and stole customer money to pump and dump penny stocks, U.S. regulators allege in a lawsuit.
The unidentified thieves made at least $732,941 in illegal profits and seven brokerage firms lost more than $2 million in making their customers whole, the Securities and Exchange Commission says.
Among the brokerage firms where accounts were hijacked were E*Trade Securities, TD Ameritrade, Charles Schwab, Scottrade, Fidelity Investments, Merrill Lynch and Vanguard Brokerage Services, The San Francisco Chronicle reported.
The thieves did not penetrate the brokerage firms' infrastructure or security systems, said SEC Internet enforcement chief John Reed Stark.
Authorities said the trading manipulation appears to have begun in December 2005 and continued for at least a year. The intruders hacked into online accounts of unsuspecting brokerage customers, placed unauthorized orders to buy shares in tiny companies and then sold the shares from their own accounts once the stock prices rose.
Regulators froze $3 million of proceeds in an account at JSC Parex Bank, based in Riga, Latvia, and at Pinnacle Capital Markets in Raleigh, N.C., which handled U.S. trading for the Latvian account.