A U.S. federal judge has agreed to freeze the assets of a company being accused of manipulating the stocks of 38 companies listed on the Nasdaq and New York Stock Exchange via compromised trading accounts, the U.S. Securities and Exchange Commission said Tuesday.
The SEC alleges in a complaint filed in federal district court in New York on Monday that BroCo Investments and its president, Valery Maltsev, gained access to investor accounts using stolen usernames and passwords, and placed unauthorized trades through the accounts.
Maltsev's company bought stocks at above-market prices through the accounts and then sold legitimately purchased positions they held in those same stocks, making as much as $255,500 since August 2009, according to the complaint (PDF).
In other instances, the company profited by "covering short positions previously established in their account while placing unauthorized sell orders through the compromised accounts at substantially lower prices," the filing says.
As a result of the alleged stock manipulation--which affected mostly smaller securities in the energy, solar, technology, and financial sectors, according to the SEC--innocent investors lost more than $600,000, the complaint says.
Authorities were able to halt two recent wire transfers seeking to withdraw more than $300,000 BroCo had in an account at Genesis Securities, the filing says. BroCo was seeking to transfer the money to a bank account it held in Cyprus, according to the complaint, which says BroCo is based in St. Petersburg.
BroCo representatives did not immediately respond to an e-mail seeking comment late on Tuesday, and calls to the telephone number listed on the Web site were met with a busy signal.
Update March 17 11:56 a.m. PST: In an official comment later posted to the BroCo Web site, Maltsev says that the Genesis Securities account in question was opened on behalf of a client. "I underline that neither me no BroCo are associated with trading on this specific account," he writes.
"BroCo as an official sub-broker of Genesis operates on stock market of the USA," the statement says. "We register accounts for all clients wishing to trade on the USA stock market and therefore have commission remuneration. All largest actors of the Russian stock market do apply the same scheme for operations in Genesis."