San Francisco: Internet company VeriSign Inc., which safeguards Web-based transactions, will release new software this week that helps brokerages detect and stop fraudulent stock manipulations.
VeriSign’s stock trading module can spot when criminals hijack legitimate accounts, said Perry Tancredi, a senior product manager at the Mountain View, California-based company. Hackers often use money from the accounts in pump-and-dump schemes: buying thinly traded stocks and selling them for a profit.
A probe last year by the US Securities and Exchange Commission, or SEC, and law-enforcement agencies found that brokerage firms reported at least $22 million (Rs92.4 crore) in losses from illegal activities.
“The brokerages are losing millions of dollars every quarter from these pump-and-dump schemes,” Tancredi said. “Because these frauds happen without their customers’ knowledge, the brokerages have to make the accounts whole.”
Tancredi said criminals often obtain passwords and account numbers through so-called phishing scams and with malicious software that spies on keystrokes. Perpetrators of phishing schemes try to trick account holders into revealing personal information by posing as their banks.
VeriSign certifies that websites are what they claim and provides services to protect online identities and privacy.
The SEC has sued traders in India, Latvia, the British Virgin Islands and Florida since 2006, after cracking down on fraudulent trades at online brokerages, including E*Trade Financial Corp., TD Ameritrade Holding Corp., Charles Schwab Corp. and Scottrade Inc.