U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23580 / June 23, 2016
Securities and Exchange Commission v. Idris D. Mustapha, Civil Action No. 16-cv-4805 (S.D.N.Y. filed June 22, 2016)
SEC Sues Uk-Based Trader for Account Intrusion Scheme
The Securities and Exchange Commission announced that it has obtained an emergency court order to freeze the assets of a United Kingdom resident charged with intruding into the online brokerage accounts of U.S. investors to make unauthorized stock trades that allowed him to profit on trades in his own account.
In a complaint filed in U.S. District Court in the Southern District of New York, the SEC alleges that in April and May, Idris Dayo Mustapha hacked into numerous accounts of U.S. customers of broker-dealers in and outside the U.S. The complaint alleges that Mustapha placed stock trades without the customers' knowledge and then traded in the same stocks through his own brokerage account. In one case, Mustapha allegedly hacked into a brokerage account and rapidly purchased shares at increasing prices and then profited by selling his own shares of the stock in his brokerage account. According to the complaint, Mustapha's scheme made at least $68,000 profits for himself and caused losses in the victims' accounts of at least $289,000.
"We will swiftly track down hackers who prey on investors as we allege Mustapha did, no matter where they are operating from and no matter how sophisticated their technology," said Robert Cohen, Co-Chief of the SEC Enforcement Division's Market Abuse Unit.
The SEC obtained an emergency court order yesterday that freezes more than $100,000 in Mustapha's assets and prohibits Mustapha from destroying evidence.
The SEC alleges that Mustapha violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, as well as Section 17(a)(1) and (3) of the Securities Act of 1933. In addition to the emergency relief, the Commission is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The SEC's Market Abuse Unit and its Boston Regional Office jointly conducted the investigation, which is continuing. Eric Forni, Susan Cooke Anderson, Mark Albers, and Michele Perillo investigated the matter, with the assistance of Alex Lefferts of the Enforcement Division's Center for Risk and Quantitative Analytics and Stuart Jackson of the Division of Economic and Risk Analysis.