Stock Hijacker Is MIA but Must Disgorge $874K

(CN) - A Latvian man accused of pocketing more than $800,000 by manipulating stock prices must disgorge the money and pay penalties, a federal judge ruled.

The Securities and Exchange Commission failed to serve Igors Nagaicevs, but U.S. District Judge Jon Tigar in San Francisco entered default judgment Friday.

Nagaicevs had established eight stock trading accounts through various broker-dealer firms in the United States between June 2009 and August 2010, according to the January 2012 complaint.

He allegedly positioned himself in a security and gained unauthorized access to online accounts, making large trades in the same security to manipulate the stock price in his favor. Nagaicevs then bought or sold the shares, generating $850,000 in revenue on approximately 159 transactions, all using hijacked online accounts, according to the complaint.

Regulators say the firms and their clients lost $2 million as a result.

The SEC had tried to serve Nagaicevs through the Latvian Ministry of Justice under provisions of the Hague Convention, which allows individuals to serve in a foreign country. Those documents bounced back, however, with the ministry indicating that the address Nagaicevs used to establish his broker accounts could not be located. Other attempts to serve Nagaicevs proved unsuccessful, according to the ruling.

In addition to the default judgment, Tigar enjoined Nagaicevs from committing future violations and ordered him to disgorge more than $874,000, plus civil monetary penalties.

"Mr. Nagaicevs' 159 separate acts caused $2 million in damages and demonstrated a high degree of scienter," Tigar wrote. "The court therefore finds that the maximum third-tier civil penalty is appropriate for each of Mr. Nagaicevs' two statutory violations, in the total amount of $260,000."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit