The Securities and Exchange Commission (SEC Securities and Exchange Commission (SEC) The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha The Securities and Exchange Commission (SEC) is one of the most widely known independent authorities in the United States. The SEC has a wide range of responsibilities, helping police markets and curbing against abuse. This includes enforcing federal securities laws, proposing securities rules, and regulating the US’ stock and options exchanges.As one of the paramount regulatory authorities in the US, the SEC is responsible for the oversight of public companies in the aforementioned segments.Wha Read this Term) charged Russian national Dmitrii Yevgenyevich Kushnarev with orchestrating a seven-year market manipulation scheme that generated approximately $31 million in gross proceeds through hacking and trading on compromised U.S. retail brokerage accounts.

The 58-year-old Russian, who previously served prison time in Russia for fraud from 2002-2004, allegedly used at least 23 false identities to mask his involvement in what investigators describe as a sophisticated "account takeover attack" operation. According to the complaint filed in federal court in Atlanta, Kushnarev's scheme ran from March 2014 through at least May 2021.

Scheme Targeted Hundreds of Brokerage Accounts

Kushnarev and unknown co-conspirators compromised hundreds of U.S. and Canadian retail brokerage accounts at no fewer than 10 different firms, forcing these accounts to purchase securities in over 380 different companies listed on the NYSE, NASDAQ, and OTC Markets, the SEC alleges. The unauthorized purchases temporarily drove up prices and trading volumes in thinly traded securities, allowing Kushnarev to profit by selling shares from his fake accounts into the artificially inflated market.

The complaint details how Kushnarev maintained at least 38 brokerage accounts, 18 in the U.S. and 20 foreign accounts with U.S. market access, under fabricated identities including names like "Vitaly Ershov," "Oskaras Korsunovas," and "Ruben Salguero Romero." To establish these accounts, he submitted false passports and identity documents, claiming citizenship in countries ranging from Poland to Malta to Spain.

According to the SEC filing, "To establish these alias accounts, Kushnarev submitted account opening applications containing false information, including false names, false residential addresses, false citizenship and employment information, and other false personal data."

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Operation Evolved to Target Options Trading

Starting in April 2019, Kushnarev shifted his focus from manipulating stock prices to exploiting the options market. He would purchase out-of-the-money call and put options at low prices, then force hacked accounts to buy the same options at artificially inflated prices, according to court documents.

One example from May 2021 shows how lucrative this approach became. Using an account under the alias "Ruben Salguero Romero," Kushnarev bought put options on First Business Financial Services stock for $0.20 to $0.50 per contract. Days later, a hacked U.S. brokerage account was forced to purchase 78 of the same option contracts for $2.00 each, generating $15,600 in sales proceeds and $12,680 in net profits for Kushnarev.

The case demonstrates significant international coordination, with the SEC acknowledging assistance from regulatory authorities across more than 25 countries and territories. European regulators from Germany's BaFin to the Malta Financial Services Authority contributed to the investigation, alongside agencies from Canada, Hong Kong, and The Bahamas.

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