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Crooks hijack online brokerage accounts Spyware used to steal account details then liquidate, manipulate stocks, SEC says. October 13 2006: 3:14 PM EDT
WASHINGTON (Reuters) -- High-tech crooks are hijacking online brokerage accounts using spyware and operating from remote locations, sometimes in Eastern Europe, U.S. market regulators said on Friday.
The computer "incursions" are a growing problem, said Walter Ricciardi, deputy enforcement director at the U.S. Securities and Exchange Commission. online_banking.03.jpg
"It's something we're very concerned about," he said in remarks at a legal conference in Washington.
About 25 percent of U.S. retail stock trades are made by online investors through roughly 10 million online accounts, according to brokerages regulator NASD.
Companies such as Ameritrade (down $0.04 to $16.96, Charts), Charles Schwab Corp. (down $0.14 to $17.59, Charts), and E*TRADE Financial Corp (down $0.20 to $22.86, Charts). offer the accounts.
Crooks will load a victim's computer or a public PC with a spy program to monitor a user's activities and capture vital information, such as account numbers and passwords.
The program then e-mails the stolen information back to the thief, who can use it to open victim accounts.
Once inside, the thief may sell off an account's portfolio and take the proceeds. Or electronically hijacked accounts may be used for "pump-and-dump" schemes to manipulate stock prices for profit, Ricciardi said.
Public computers in such places as Internet cafes and hotel rooms are especially vulnerable to incursions. But home computers may also be hit as spyware can be imported simply by opening an e-mail attachment, said John Stark, chief of the SEC's Office of Internet Enforcement.
Incursion scams under SEC investigation are far-flung. "We're seeing these frauds in offshore entities and persons, including those located in Eastern Europe," Stark said.
The SEC is working to track down the hackers and to educate online investors, he said.
Steps to fight incursions include securing an online account by changing passwords frequently and never using an unfamiliar computer to enter an account number or password.
To fight a similar problem, U.S. banks are exploring new online banking security technologies since a study showed identity theft via online banking is a fast-growing crime.
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