SEC alleges UK trader in pump-and-dump scheme


June 23, AtoZForex The United States (US) Securities and Exchange Commission (SEC) strives to promote a market environment that deserves the public’s trust. As a result of its recent regulatory activity, SEC alleges UK trader in pump-and-dump scheme resulting in $68,000 ill-profits. The name of the trader is Idris Dayo Mustapha and he is based in the United Kingdom.

What is this pump-and-dump scheme about?

Idris Dayo Mustapha is alleged in hacking the accounts owned by the US investors. Supposedly, the UK trader was carrying out the trades that would affect market prices to his own profit and clients’ loss.

As a part of his pump-and-dump scheme, Mustapha has got the access to clients’ accounts and quickly bought stocks at rising prices and then ill-benefitted by selling his own shares of the stock in his account. Below you can see the excerpt of allegations taken from the SEC complaint against a trader filed on June 22, 2016.

21. On April 18, 2016, Mustapha purchased and sold shares of Regulus Therapeutics Inc. (“RGLS”) in his own brokerage account and, acting alone or in concert with others, caused April Victim No. 1 to purchase and sell RGLS shares. First, Mustapha caused April Victim No. 1 to purchase RGLS shares in April Victim No. 1’s account at the New Jersey Broker. Mustapha then sold RGLS shares in his own account. Mustapha also caused April Victim No. 1’s account to sell shares of RGLS that day. April Victim No. 1 had not previously purchased or sold RGLS securities and did not authorize the trades in April Victim No. 1’s account.

22. On April 18, 2016, Mustapha purchased and sold shares of Yirendai Ltd. Sponsored ADR (“YRD”), Cnova N.V. Shares (“CNV”), and/or K12 Inc. (“LRN”) in his own brokerage account and, acting alone or in concern with others, caused April Victims No. 1, 2, 3, and 4 to purchase and sell YRD, CNV, and/or LRN shares in their respective brokerage accounts. April Victims No. 1, 2, 3, and 4 had not previously purchased or sold these securities and did not authorize these trades in their accounts.

What is more, the account intrusions scheme may seem to be carried out by highly educated hackers. In reality, the SEC’s complaint notes the analogy of IP address attributed to Idris Dayo Mustapha on various cases related to trading. Furthermore, the complaint states that

‘Passwords to the April Victims’ accounts had been reset on or about April 18 and 19, 2016, through unauthorized access to an administrative user’s account. Mustapha accessed his brokerage account to make the May 17, 2016 trades with the same computing device that he used to hack into the victim’s account to make unauthorized trades on the same day.’

It is still not known, whether the clients have given their passwords out or the access was actually hacked.

SEC complaint had led to the frozen $100,000 of UK trader’ assets

As SEC alleges UK trader in pump-and-dump scheme, the complaint has been filed in New York court yesterday. In the complaint, the regulator suspects that in the period from April and May 2016, Mustapha hacked a number of accounts’ access belonging to the broker-dealers in and outside of the US. The complaint highlights that UK trader’s pump-and-dump scheme has made him $ 68,000 in ill-profits. The Co-Chief of the SEC Enforcement Division’s Market Abuse Unit, Robert Cohen, commented in the official statement from SEC:

“We will swiftly track down hackers who prey on investors as we allege Mustapha did, no matter where they are operating from and no matter how sophisticated their technology.”

Additionally, this scheme had caused the loss of at least $ 289,000 to the clients’ accounts.

Furthermore, the court order that was granted on 22 June 2016, put a freeze on over $100,000 of Mustapha’s assets. Additionally, the filed order prohibits the trader from destroying the evidence due to the fact, that complaint was considered by the court.

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