TELECOM Digest OnLine - Sorted: OnLine Brokerage Acccount Scams on Internet Worry SEC

OnLine Brokerage Acccount Scams on Internet Worry SEC

Reuters News Wire (
Fri, 13 Oct 2006 16:19:56 -0500

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.

"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.

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.

Copyright 2006 Reuters Limited.

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