The U.S. Securities and Exchange Commission (SEC) on Monday charged a Philadelphia-based day trader with participating in a scheme that involved making unauthorized trades in the brokerage accounts of more than 100 investors to artificially affect stock prices, then trading in his own accounts to take advantage of the artificial market activity.
The allegations have not been proven.
According to the complaint, the accused trader, Joseph Willner, generated at least US$700,000 in illicit profits as a result of this trading. The SEC alleges that an unnamed accomplice secretly accessed more than 110 brokerage accounts to make the trades designed to artificially impact stock prices. The regulator alleges that Willner and his accomplice split the illicit trading profits via payments made in Bitcoin.
"Account takeovers are an increasingly significant threat to retail investors, and it is exactly the type of fraud our new cyber unit is focusing on," says Stephanie Avakian, co-director of the SEC's enforcement division. "We are committing substantial resources to combating cyber-based threats to protect investors and our markets from intruders who manipulate the system for their own illicit gain."
The SEC's complaint alleges that Willner engaged in fraud and market manipulation. It is seeking the return of ill-gotten gains plus interest, penalties, and a permanent injunction.
In a parallel action, the U.S. Attorney's Office for the Eastern District of New York and the U.S. Department of Justice has also filed criminal charges against Willner.
The SEC says that its investigation is continuing.