U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20520 / April 7, 2008
Securities and Exchange Commission v. One or More Unknown Traders in the Common Stock of Certain Issuers a/k/a AWE Trading, Inc. and Andrew Andersen, 08-CV-1402- DEARIE/AZRACK (E.D.N.Y. April 7, 2008)
The Securities and Exchange Commission today filed a complaint in the federal district court in the Eastern District of New York against one or more unknown traders who carried out a sophisticated Internet scheme that stole the identities of unsuspecting individuals and netted more than $66,000 in illicit profits in just seven weeks. According to the Commission's complaint, the defendants conducted their entire online account intrusion scheme over the Internet and concealed their identities by, among other things, fraudulently opening brokerage accounts in the names of individuals who responded to a job advertisement on the Website Craig's List.
According to the Commission's complaint, beginning in February 2007, the unknown traders posted an advertisement on Craig's List for a job with a fictitious Latvian brokerage firm, AWE Trading, Inc. Individuals who responded to the advertisement provided their personal information, including social security numbers and dates of birth to AWE via the Internet for purported company background checks. The complaint further alleges the unknown traders actually used the personal information they collected from the individuals to open securities trading accounts online with Interactive Brokers LLC without the individuals' knowledge.
The Commission's complaint further alleges that, on multiple occasions between March 8 and April 24, 2007, the unknown traders gained unauthorized, online access to accounts held by customers of various retail brokerage firms. They purchased and sold at least 18 securities listed on the New York Stock Exchange and NASDAQ. The unknown traders simultaneously bought and sold the same securities in the accounts they opened fraudulently, profiting from the change in trading volume and stock prices generated by the unauthorized transactions.
The Commission's complaint charges the unknown trader defendants with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 by engaging in the complex securities account intrusion scheme. The complaint also seeks a final judgment permanently enjoining the unknown traders from further violations of the securities laws and ordering them to repatriate assets of the fraudulent scheme they hold outside the U.S., to disgorge their ill-gotten gains, and to pay civil money penalties. The Commission's complaint identifies Interactive Brokers, which fully cooperated in the staff's investigation, as a relief defendant because it currently holds cash and securities related to the scheme. In April 2007, Interactive Brokers detected suspicious trading in the involved accounts, suspended activity and froze the funds in the account.