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Wednesday, April 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Nice Work If You Can Get It

MANHATTAN (CN) - A Russian man swiped more than a quarter of a million dollars by hacking into other people's brokerage accounts to meddle with the price of shares he wanted to buy or sell, the SEC says in a request for emergency action. It took Valery Maltsev only 20 minutes to buy shares and then inflate or depress their price by hacking into someone else's account and buying or selling shares at manipulated prices, the SEC says.

The SEC sued Maltsev and his company, BroCo Investments, in Federal Court. Maltsev said in a statement that neither he nor BroCo were "associated with trading on this specific account."

"The account suspected in price manipulation in market belongs to client of the company," he said in the statement. "The client performed his own trading and traded at his own responsibility."

According to the complaint, Maltsev, 36, would start by establishing a position in a company's shares. Then he drove up the price by "hijacking" account information from unwitting investors and placing orders for their accounts at above-market prices.

During his 4-month scheme, BroCo also shorted stocks by placing unauthorized sell orders through the compromised accounts at lower prices, the SEC says.

Maltsev made more than $250,000 through the fraud, according to the complaint.

"From August 2009 to the present, these transactions have created the appearance of legitimate trading activity and have artificially affected the prices of at least 38 issuers," the complaint states. "Online broker-dealers whose customers' accounts were compromised during that time period suffered losses of at least $603,000 as a result of the defendants' fraudulent conduct."

Maltsev says he does not know where the SEC came up with the figures for the damages it claims.

"They just want us to cover these losses," he said in the statement.

Hijacked account holders had their securities liquidated and usually lost money when the securities returned to their pre-manipulation prices, the SEC says. The agency says the scam also attracted other traders to the artificially inflated prices.

Maltsev claims that it is odd that the SEC discovered six months of account intrusions, though no account holders called the police.

"Scottrade investors didn't even see that money were going away from their accounts, they were not noticing that for six months! I can't understand that," Maltsev said in a statement. "And if SEC will not conduct an investigation on this case, Broco will. We should find the truth. And I'm not going to even think about covering those losses until the investigation is done."

Maltsev tried to wire more than $300,000 from his account at Genesis Securities to an account in Cyprus, where he claims BroCo is headquartered, according to the complaint.

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