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. Last Updated: 07/27/2016

SEC Fingers Russian Trader

NEW YORK -- Pump-and-dump schemes in the stock market are an old way of making money from gullible investors, but they require persuading the investor to buy an overpriced stock.

A Russian trader, operating through an Estonian brokerage firm, found a simpler way to pump and dump stocks, the Securities and Exchange Commission said Tuesday.

The SEC said the trader, Yevgeny Gashichev, who was trading though an account of Grand Logistic, a Belize corporation based in Estonia, used the Internet to steal passwords of account holders at online brokerage firms, including E*Trade Securities, TD Ameritrade and Scottrade.

The commission said Gashichev would buy, through his own account, shares in a thinly traded company. Immediately after that, he would use the accounts of victims to buy large quantities of the stock, driving up the price. He would then sell his shares into that demand. In some cases, he would then sell the stock short, profiting further when the price declined.

The SEC complaint said Gashichev "initially funded the Grand Logistic account with $30,000 and, in approximately seven weeks, realized $353,609 in profits from his fraudulent scheme." It said the trades, from Aug. 28 to Oct. 13, were in 21 securities.

"The SEC has become aware of a dramatic increase in the number of intrusions into online brokerage accounts. We have been working closely with other regulators and brokerage firms in an effort to ensure that online brokerage trading is safe and secure," said Daniel Hawke, administrator of the SEC district office in Philadelphia.