BroCo's response to the SEC investigation: suspect identified?

BroCo Company (or the US subsidiary: BroCo Investments Inc) has just sent me this official statement regarding SEC’s accusations from day

BroCo Company (or the US subsidiary: BroCo Investments Inc) has just sent me this official statement regarding SEC’s accusations from day before yesterday.

To remind you: SEC alleged that  “BroCo Investments, Inc., its president Valery Maltsev, and/or individuals acting in concert with them hijacked the online brokerage accounts of unwitting investors using stolen usernames and passwords and subsequently placed unauthorized trades through the compromised accounts to manipulate the markets of at least thirty-eight issuers between August 2009 and December 2009. In almost every instance, prior to intruding into these accounts, the Defendants acquired positions in their own account. Then, just minutes later, without the accountholders’ knowledge, the Defendants, and/or individuals acting in concert with them, placed scores of unauthorized buy orders at above-market prices using the compromised accounts. After these unauthorized buy orders were placed, the Defendants sold the positions held in their own account at the artificially inflated prices.”

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This is Broco’s official statement:

SEC has contacted Broco Investments regarding the accounts release

Russian swindlers have used the company’s brokerage services for manipulations at NYSE and will be taken on control by Russian and US law-enforcement authorities.

US Securities and Exchange Commission (SEC) has contacted Broco Investments on March 18, 2010 and expressed a desire to solve the situation with company’s frozen accounts as soon as possible. Preliminary hearings in the case are scheduled for March 23, 2010.

SEC representatives have contacted us at about 18:00 MSK and said that now they understand that the picture of this situation what they see now differs from that one in the beginning. Now they know that Broco Investments is working with Genesis Securities using a sub-broker scheme and they are very surprised to get this information from news and not from Genesis Securities. Genesis has all of our client agreements and did not inform SEC about this fact.

We have agreed to start a close collaboration with the Commission in order to correct all the misunderstandings appeared after the information from SEC has came among with their accusations. Moreover after our application sent to Department of the Interior the Commission will cooperate with the Russian law-enforcement authorities in order to investigate the fact of brokerage account intruding.

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The company’s security has conducted an investigation and now found out those persons whose manipulations caused groundless complaints from SEC to Broco Investments.

“The equivocal account belongs to our client”, says head of Broco legal department Dmitry Zelenko. “This client has been conducting his trading on his own and Broco have just provided him with technical facilities and brokerage services in cooperation with licensed Genesis Securities. This account was identified as belonging to Broco by a mistake”.

Now the company has facts of evidence of the client’ fraud manipulations and this facts have been shared with Russian law-enforcement authorities as this client is Russian citizen.

“During the investigation we found out that the swindler has entered into collusion with unknown persons who have provided him with instructions regarding his trading activity. They have supposed to be rewarded with the part of the client’s profit”, said Dmitry Zelenko. The client’s name is keeping closed in order not to prevent the official investigation.

“Our further steps are to initiate criminal proceedings of swindlers within Russian Federation, to recover damages from the swindlers and to protect the company’s reputation in the court of New York”, says Valery Maltsev, the President of Broco. Moreover, as Valery Maltsev says, the company is know considering new offers from other providers of trading access to the US financial markets.

About Broco:

Broco is one of the largest brokerage companies in international operating in the field of Internet trading. With the help of modernized products of high quality, diverse services and a competent team, Broco manages to cater various needs of traders and investors and facilitates them with all essential tools for successful performance on financial markets.

Broco was established in 2008. The company provides with access to Russian and US stock markets, Forex market, Russian and foreign options and futures. In 2009 Broco has increased the number of clients in four times implementing five new trading platforms with new opportunities and some new services.

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