Business Week

Monday, October 16, 2006

Online Brokerage Account 'Incursions' Worry SEC


Online Brokerage Account 'Incursions' Worry SEC

By Reuters  
October 13, 2006


WASHINGTON (Reuters)—High-tech crooks are hijacking online brokerage accounts using spy-ware and operating from remote locations, sometimes in Eastern Europe, a senior U.S. market regulator said on Friday.

The U.S. Securities and Exchange Commission sees these computer "incursions" as a growing problem, said Walter Ricciardi, deputy enforcement director at the SEC.

"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.

Incursion crooks load a victim's or a public computer with a program to monitor the 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 victims' accounts.

Once inside, the thief may sell off an account's portfolio and take the proceeds. Or accounts hijacked in incursions may be used for "pump-and-dump" schemes to buy and sell manipulated stocks for profit, Ricciardi said.

Public computers, such as those in Internet cafes or hotel rooms, are especially vulnerable to incursions, he said.

The SEC is tracking down those perpetrating incursions and trying to educate online investors to be careful, he said.

Source: Online Brokerage Account 'Incursions' Worry SEC