Alleged hacker denies stock exchange fraud

THE PRESIDENT of a Russian company accused of hacking servers to make big bucks on the stock exchange has denied responsibility.

Broco Investments had its assets frozen by the Securities and Exchange Commission (SEC), after being accused of a 'hack, pump and dump' scam.

If the SEC is right, this would have meant that Broco hijacked the brokerage accounts of Scottrade investors, created the appearance of legitimate trading activity and artificially affected share prices. Using the hacked accounts it could sell shares at inflated prices.

In a letter to the Inquirer, Broco president Valery Maltsev denied that he or Broco were associated with trading on the hijacked accounts.

Although his statement is badly translated it appears to say that Broco is a sub-broker of a company called Genesis, which operates on the US stock market. It registers all clients wishing to trade and receives commission renumeration.

Maltsev said, "The account suspected of price manipulation in the market belongs to a client of the company. The client performed his own trading and traded at his own responsibility.

"Our company together with Genesis only procures technical and brokerage facilities. Thus Broco is not associated with trading on the above-mentioned account."

Maltsev claimed that SEC is after around $850,000 in damages from Broco, but that at no point were the police involved, and there was no chance of the Russian company paying this back until an investigation was done.

He added, "Unfortunately mass media like to dramatise the facts and turn it to scandal. Our reputation has been building up for years, our clients know that, and it cannot be destroyed in one day.

"We will fight for justice in solving this case. Our goal now is to prove our non-participation in mentioned transactions and to try and dispute a request for accounts freeze." µ