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Online brokerage scam
Three charged in online brokerage scam
ZDNet Tags: Hacking,
Federal authorities have charged three men with hacking into online brokerage accounts and using the proceeds to manipulate the stock of
Google, Sun Microsystems and 12 other companies.
Indian nationals Jaisankar Marimuthu, Chockalingam Ramanathan and Thirugnanam Ramanathan were arrested and indicted on multiple counts,
marking the first time an arrest and federal charges were made in an online brokerage account intrusion case.
The men allegedly took positions in 14 stocks and then hacked into online U.S. brokerage accounts between July and November 2006. Using
the victims' own account funds, the defendants allegedly pumped up the market for those shares and then dumped them, accumulating profits
of more than $121,500. The brokerages subsequently suffered damages of more than $875,000 for the compromised accounts.
The indictment was unsealed Monday in a Nebraska federal court. Marimuthu and Chockalingam Ramanathan were charged with one count of
conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud, and six counts of aggravated
identity theft. The third person in the case, Thirugnanam Ramanathan, was charged with one count of conspiracy, two counts of computer
fraud and two counts of aggravated identity theft.
Marimuthu was arrested in late December by Hong Kong police under charges including computer fraud and money laundering. Thirugnanam
Ramanathan was arrested by Hong Kong authorities in late January under a U.S. provisional arrest warrant. Chockalingam Ramanathan is
still at large.
The Securities and Exchange Commission filed a civil complaint in the case, seeking a preliminary and permanent injunction, disgorgement
of illegal proceeds and monetary damages. The SEC has filed four account intrusion cases since December, involving defendants in Estonia,
Latvia and now Hong Kong and Malaysia.
Online Brokerage Accounts
Online Brokerage Accounts: What You Can Do to Safeguard Your Money and Your Personal Information
Let's hope this never happens to you: You have a few free minutes so you decide to go online to check your brokerage account information.
Your account balance is much lower than you expect - and you know that, at least for today, neither the market nor any of your securities
fell in value. You see that there were several wire transfers of money from your account to an outside checking account. But you never
authorized those transactions - instead, an identity thief did, and that thief has now stolen your cash as well as your personal
information.
Like many investors, you may enjoy some of the conveniences of an online brokerage account, like checking your brokerage account
information at any time of day or night, buying and selling securities, or even transferring money between your brokerage account and
another account. But if you don't take steps to protect your personal information when you go online, you could be telling your own story
of identity theft.
How Online Identity Theft Can Happen
Many identity thieves use malicious software programs to attack vulnerable computers of online users. These software programs can monitor
your computer activity and send information back to the thief's computer.
Sometimes, these programs will log your key strokes, which allows identity thieves to easily obtain username and password information for
any of your online accounts, including your brokerage account.
Other identity thieves "phish" for your personal information. "Phishing" involves the use of fraudulent emails and copy-cat websites to
trick you into revealing valuable personal information - such as your account number, your social security number, and the username and
password information you use when accessing your account. Sometimes fraudsters will use phishing scams to try to get you to download
keystroke logging or other malicious software programs unsuspectingly.
But not all identity thieves have gone "high tech." Many still use less sophisticated ways of stealing your personal information, such as
looking over your shoulder when you're typing sensitive information or searching through your trash for confidential account information.
How to Protect Yourself Online
You'll need to protect yourself against identity thieves, whether hackers, phishers, or snoops, when you use your online brokerage account.
Here are a few suggestions on ways to keep your personal information and money more secure when you go online:
Beef Up Your Security. Personal firewalls and security software packages (with anti-virus, anti-spam, and spyware detection features) are
a must-have for those who engage in online financial transactions. Make sure your computer has the latest security patches, and make sure
that you access your online brokerage account only on a secure web page using encryption. The website address of a secure website
connection starts with "https" instead of just "http" and has a key or closed padlock in the status bar (which typically appears in the
lower right-hand corner of your screen).
Security Tip: Even if a web page starts with "https" and contains a key or closed padlock, it's still possible that it may not be secure.
Some phishers, for example, make spoofed websites which appear to have padlocks. To double-check, click on the padlock icon on the status
bar to see the security certificate for the site. Following the "Issued to" in the pop-up window you should see the name matching the site
you think you're on. If the name differs, you are probably on a spoofed site.
Use a Security Token (if available). Using a security token can make it even harder for an identity thief to access your online brokerage
account. That's because these small number-generating devices offer a second layer of security - a one-time pass-code that typically
changes every 30 or 60 seconds. These unpredictable pass-codes can frustrate identity thieves. While fraudsters can use keystroke logging
programs to obtain regular username and password information, they can't use these programs to obtain the security token pass-code. Ask
your brokerage firm if you can protect your online account with a security token or similar security device.
Be Careful What You Download. When you download a program or file from an unknown source, you risk loading malicious software programs on
your computer. Fraudsters often hide these programs within seemingly benign applications. Think twice before you click on a pop-up
advertisement or download a "free" game or gadget.
Use Your Own Computer. It's generally safer to access your online brokerage account from your own computer than from other computers. If
you use a computer other than your own, for example, you won't know if it contains viruses or spyware. If you do use another computer, be
sure to delete all of the your "Temporary Internet Files" and clear all of your "History" after you log off your account.
Don't Respond to Emails Requesting Personal Information. Legitimate entities will not ask you to provide or verify sensitive information
through a non-secure means, such as email. If you have reason to believe that your financial institution actually does need personal
information from you, pick up the phone and call the company yourself - using the number in your rolodex, not the one the email provides!
Security Tip: Even though a web address in an email may look legitimate, fraudsters can mask the true destination. Rather than merely
clicking on a link provided in an email, type the web address into your browser yourself (or use a bookmark you previously created).
Be Smart About Your Password. The best passwords are ones that are difficult to guess. Try using a password that consists of a combination
of numbers, letters (both upper case and lower case), punctuation, and special characters. You should change your password regularly and
use a different password for each of your accounts. Don't share your password with others and never reply to "phishing" emails with your
password or other sensitive information. You also shouldn't store your password on your computer. If you need to write down your password,
store it in a secure, private place.
Use Extra Caution with Wireless Connections. Wireless networks may not provide as much security as wired Internet connections. In fact,
many "hotspots" - wireless networks in public areas like airports, hotels and restaurants - reduce their security so it's easier for
individuals to access and use these wireless networks. Unless you use a security token, you may decide that accessing your online
brokerage account through a wireless connection isn't worth the security risk. You can learn more about security issues relating to
wireless networks on the website of the Wi-Fi Alliance.
Log Out Completely. Closing or minimizing your browser or typing in a new web address when you're done using your online account may not
be enough to prevent others from gaining access to your account information. Instead, click on the "log out" button to terminate your
online session. In addition, you shouldn't permit your browser to "remember" your username and password information. If this browser
feature is active, anyone using your computer will have access to your brokerage account information.
How to Know if Your Identity Has Been Stolen
Sometimes, it can be extraordinarily difficult to determine whether someone has stolen your identity. If you take the steps below, you
may be able to find out whether you've been victim of identity theft and protect yourself from further harm:
Read Your Statements. Don't toss aside your monthly account statements! Read them thoroughly as soon as they arrive to make sure that all
transactions shown are ones that you actually made, and check to see whether all of the transactions that you thought you made appear as
well. Be sure that your brokerage firm has current contact information for you, including your mailing address and email address. If you
see a mistake on your statement or don't receive a statement, contact your brokerage firm immediately.
Monitor Your Credit Report. Reviewing your credit report may alert you to unauthorized activity, and, therefore, can be an effective way
to fight identity theft. You can obtain a free credit report every 12 months from three different credit bureaus by contacting the Annual
Credit Report Request Service.
Investor Tip: Read your brokerage account agreement carefully because many firms take the position that you are responsible for the
security of your account information, such as your username, password, and account number. In addition, your brokerage account agreement
may provide information about what specific steps you should take if you notice any unauthorized account activity.
What to Do if You Run into Trouble
Always act quickly when you come face to face with a potential fraud, especially if you've lost money or believe your identity has been
stolen.
Identity Theft. If you think that your personal information has been stolen, visit the Federal Trade Commission's Identity Theft Resource
Center at www.consumer.gov/idtheft/index.html for information on how to file a complaint and control the damage.
Securities Scams. Before you do business with any investment-related firm or individual, do your own independent research to check out
their background and confirm whether they are legitimate. For step-by-step tips and links to helpful websites, please read Check Out
Brokers and Advisers and SIPC Exposes Phony "Look-Alike" Web Site.
Report investment-related scams to the SEC using our online Complaint Center.
Phishy Emails. If a phishing scam rolls into your email box, be sure to tell the company right away. You can also report the scam to the
FBI's Internet Fraud Complaint Center at www.IFCCFBI.gov If the email purports to come from a brokerage firm or mutual fund company, be
sure to pass along that tip to the SEC's Enforcement Division by forwarding the email to enforcement@sec.gov.
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