US-based online brokerage houses have been hit by losses of $22m after an attack by a sophisticated gang of identity thieves.
Rather than using key loggers to snatch the bank account credentials of prospective marks, fraudsters targeted account holders of online brokerage accounts. Using hijacked accounts (or fraudulently created dummy accounts) the crooks bought stock in seldom traded stock, artificially inflating its value, before selling shares (bought before the scam kicked off) at vast profit.
The pump-and-dump scam targeted customers of TD Ameritrade and E-Trade. Both brokerage houses have covered customers' losses. The scam resulted in losses for E-Trade of $18m and $4m for TD Ameritrade, Computerworld reports.
Each said they have instituted extra security measures to make sure they aren't hit again, mainly revolving around the use of anti-fraud technology to enable them to spot suspicious trades more quickly, or customers using two-factor authentication to remove the security risk posed by static login credentials.
The attacks, staged over the last three months, are thought to be the work of hackers in Eastern Europe and Asia. Investigators at the FBI, US Securities and Exchange Commission, and the National Association of Securities Dealers are working to identify the perpetrators of the fraud.
News of the losses came during investor conference calls by TD Ameritrade and E-Trade earlier this month. ®