Canadian regulators are investigating a rash of phishing frauds at online brokerages in which raiders used the funds from looted accounts to artificially inflate the price of penny stocks.
The Investment Dealers Association of Canada has warned brokerages to be on the alert for suspect account activity after a number of member firms reported the scams, in which customer accounts were liquidated and the funds used to place orders for specific securities listed on the OTC Bulletin Board and the Nasdaq pink sheets.
A number of customers of BMOInvestorLine were hit by the crooks, while TD Waterhouse is also investigating a rash of similar incidents.
The IDA says there is no suggestion that the security of firms’ on-line systems has been compromised. "It appears that clients may have inadvertently given up the information to the persons who subsequently hijack the individuals’ accounts."
Investigators are pursuing a theory that after emptying accounts, the fraudsters invested the credit in specific penny stocks in order to manipulate the price of shares in the issuer. Alternatively, they may have been using the new investment as a money-laundering smokescreen to extract the cash from the raided accounts without raising suspicions.