On Monday the United States Securities and Exchange Commission filed a complaint to freeze the assets of a company that is accused of manipulating stock prices. The company, BroCo Investments located in Russia, was using stolen user accounts and passwords to purchase stocks at a higher then market price and then selling their own legitimately purchased stocks for a profit. This would then leave the victim owning stocks that were bought at a premium.
In layman’s terms, and hypothetically speaking, the scam worked like this;
- BroCo purchases stock ABC for $1.00
- BroCo uses the hacked accounts to purchase more stock of ABC for $1.30, driving the price up.
- BroCo sells stock ABC for $1.30 that they purchased in step 1, in turn driving the cost back down.
- Now the victim, who's account was hacked in step 2, is stuck with ABC at $1.30.
SEC Press Release
John "Mike" Wright