Three men from India were indicted Monday on federal charges of hacking into online brokerage accounts and pumping up stock values to turn a hefty profit for themselves, the Justice Department said.
The alleged "hack, pump and dump" scheme has cost one brokerage firm at least $2 million in losses, prosecutors said. An estimated 60 customers and nine U.S. brokerage firms were duped in the case during a four-month period last year, prosecutors said.
According to the 23-count indictment, unsealed in Omaha, Neb., the three men bought stocks through the U.S. online firms with their own accounts. Operating from Thailand and India, the men then allegedly used stolen identity information to pose as other online share-buyers -- inflating the value of the stock.
The men then sold their own shares at a higher price -- turning a substantial profit, prosecutors said.
Two of the three suspects -- Jaisankar Marimuthu, 32, of Chennai, India, and Thirugnanam Ramanathan, 34, an Indian native who lives in Malaysia -- were arrested in recent weeks in Hong Kong, the Justice Department said. The third, Chockalingam Ramanathan, 33, also of Chennai, India, is still at large.
The case marks the first time hackers suspected of defrauding U.S.-based online brokerage firms have been arrested overseas, the Justice Department said. Assistant Attorney General Alice Fisher said such cases "pose serious risks to investors and brokerage firms across the globe."
Additionally, the Securities and Exchange Commission filed civil charges against all three men in federal court in Nebraska. The SEC has investigating several similar cases in recent months.