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With the advent of online brokerage accounts, individuals worldwide have been given the ability to directly manage their portfolios with the click of a mouse. This convenient and simple task, completed at a home or business computer, however, has attracted the focus of cyber criminals who purposely work to steal customer log-in credentials via phishing attacks and/or keylogger programs. Such criminals then utilize this stolen information to manipulate stocks within these brokerage accounts to further their criminal enterprise. It has been determined that these credentials are often stolen by a "harvester,” i.e. a criminal that gathers the information, who then sells the credentials in online criminal forums at a fraction of the accounts’ liquidation value. Once the credentials have been secured, they are then used to manipulate publicly-traded stocks in revised “pump and dump” schemes. A “pump and dump scheme” is a criminal act that involves a stock purchased at low price that is then illegally inflated and sold at a high price. Once purchased by investors, the criminal “dumps” the stock, and the price falls. The investor will then lose their money. Generally, the stock manipulators themselves are the purchasers of these accounts.
Criminals initially viewed brokerage accounts as being less desirable than bank or credit card accounts because of the difficultly involved with moving money out of them. This often involves the time consuming, additional step of liquidating the accounts’ securities holdings. This perception changed around 2006 when criminals pioneered a new twist on an old scheme when they began using the compromised accounts to trade large volumes of low-liquidity “penny stocks.” The Stock Aid initiative is the NCFTA’s response to combat this ever growing and changing scheme.
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Goals & Objectives
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The goal of the Stock Aid initiative is two-fold and is delineated into short- and long-term goals:
Short-term: By utilizing shared industry expertise, as well as our own cyber information, NCFTA hopes to diminish securities fraud and proactively block fraudulent account log-ins and trades.
Long-term: NCFTA will use its own in-house intelligence received from its partners, as well as any other brokerage data collected, to work to identify criminals within the brokerage sector. By combining this data, NCFTA will maximize the impact of the data and share it with industry partners, resulting in a stronger ability to uncover broader criminal enterprises. Use the brokerage data in conjunction with NCFTA’s own in-house intelligence collected from other sector partners. By combining these data streams and leveraging them to identify criminal enterprises, the NCFTA maximizes the impact of the data being shared within its industry working relationships to define a broader criminal enterprise.
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