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The Security and Exchange Commission indicted 18 individuals and entities for their alleged role in hacking into dozens of online brokerage accounts.
The SEC alleges that at least 31 retail brokerage accounts were used to purchase microcap stocks in order to manipulate the price and trading volume of those stocks. The SEC has not identified the brokerages or accounts that were hacked.
“This case illustrates the critical importance of cybersecurity and our ongoing efforts to protect retail investors from cyber fraud,” Gurbir Grewaldirector of the SEC’s Division of Enforcement, said in a statement.
“The SEC remains committed to stamping out this type of wrongdoing. Investors should also take precautions, including choosing strong passwords, using different passwords for different accounts, and using two-factor authentication when ‘She’s available,’ he added.
Those charged include Rahim Mohammad of Alberta, Canada, which allegedly coordinated the hacking attacks, and several others in the United States and abroad who may have benefited from or participated in the scheme, according to the SEC.
According to the SEC, Mohamed owns 100% of Nexium FinancialCEO and President of Softlab9 Technologiesand “controls or controlled” a brokerage firm in the Cayman Islands called White Sands Securities SEZC.
The SEC alleges that in late 2017 and early 2018, hackers accessed all 31 U.S. retail brokerage accounts to buy the securities of Development of Lotus biotechnology and Good game.
The purchases allegedly allowed the fraudsters, who already controlled large blocks of Lotus Bio-Tech and Good Gaming shares, to sell their holdings at artificially high prices and reap more than $1 million in illicit proceeds.
The SEC alleges that Davies Wang from British Columbia, Canada, and Glenn Laken of Chicago, respectively controlled the majority of Lotus Bio-Tech and Good Gaming shares, which were sold off during the hacking attacks.
Mohamed reportedly coordinated with Wong, Laken and others to orchestrate the attacks. The SEC also alleges that Richard Tang from British Columbia, Canada, has participated in the Lotus Bio-Tech and Good Gaming programs.
“Our complaint details a brazen and sophisticated scheme, with hackers using international accounts and bogus account holders to cover their tracks,” Nekia Hackworth Jones, director of the SEC’s Atlanta regional office, said in a statement. “As this case shows, The Division can discover fault even when it crosses borders and is hidden behind multiple layers of obfuscation.”
The SEC complaint includes charges of violating the anti-fraud and beneficial ownership reporting provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The SEC is seeking the return of ill-gotten gains plus interest, penalties, bars, and other equitable relief. The SEC investigation continues.
In addition to Mohamed, Wong, Laken, and Tang, the SEC listed the following defendants and provided details about them:
- Zoltan Nagya Canadian citizen who resides near Vancouver, British Columbia, Canada and has ties to Point Roberts, Washington
- Jeffrey Coxa Canadian citizen who resides in Calgary, Alberta
- Philip SewellBritish citizen residing in Vancouver, British Columbia, Canada
- Breanne Wonga Canadian citizen who resides in Panama and Vancouver, British Columbia, Canada
- Christophe Merania resident of Glendale Heights, Illinois
- Anna TangCanadian citizen residing in Richmond, British Columbia, Canada
- Robert SeeleyBritish citizen residing in the Dominican Republic
- Richard SmithBritish citizen residing in the Dominican Republic
- Christopher SmithBritish citizen residing in the Dominican Republic
- SE Capitala private Nevis entity which was incorporated on September 26, 2000 and is based in the Dominican Republic.
- POP fundsa private Nevis entity which was incorporated on January 3, 2007 and is based in the Dominican Republic
- Maximum Ventures Holdingsa private Wyoming entity that was organized on April 13, 2015
- harmony cresta private Nevada entity that was originally incorporated on April 30, 2015, and then reincorporated in Wyoming on March 12, 2019.
- Avatele Groupa Wyoming private limited company that was organized on March 11, 2015.