Four firms are accused of helping the man perform illegal trades

Jan 30, 2012 15:57 GMT  ·  By

The US Securities and Exchange Commission (SEC) charged a man from Latvia after suspecting him of running an online fraud scheme in which he manipulated the prices of more than 100 New York Stock Exchange and Nasdaq securities, causing a total loss of $2 million (1.4 million EUR).

According to a SEC press release, the man, Igors Nagaicevs, wasn’t acting alone, instead he was helped by four electronic trading organizations and eight executives that were also charged for allowing the suspect to access US markets.

Nagaicevs allegedly hacked into online brokerage accounts more than 150 times during a course of 14 months and drove stock prices to his own liking by making unauthorized purchases or sales.

By using unfiltered and anonymous access provided by the four firms that allowed him to operate through their platforms, he was able to trade the securities at artificial prices, gaining large illegal incomes.

“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors and their brokerage firms,” revealed Marc J. Fagel, director of the SEC’s San Francisco Regional Office.

Two of the eight executives accused of helping the Latvian agreed to a settlement. In the meantime SEC works on determining whether the other firms violated the broker registration provision of the federal security laws.

According to the SEC’s complaint filed in federal court in San Francisco, Nagaicevs broke the antifraud provisions of the federal securities laws and the organization now seeks injunctive relief, disgorgement with prejudgment interest, and financial penalties.

“These firms provided unfettered access to trade in the U.S. securities markets on an essentially anonymous basis,” Daniel M. Hawke, chief of the SEC’s Market Abuse Unit, said.

“By failing to register as brokers, the firms and principals in this case exposed U.S. markets to real harm by evading crucial safeguards of the federal securities laws. We will not allow firms like these to fly under the radar and become safe havens for market abuse.”