Botnet is alleged to have manipulated stock prices

A BOTNET, a network of malware infected computers that spews spam emails, was allegedly used to inflate stock prices.

Texan Christopher Rad, 42, is accused of conspiring with stock promoters in a scheme to inflate the price and volume of stock trading activity, said the Wall Street Journal. He allegedly engaged in the scheme between the end of 2007 and the beginning of 2009.

The 'pump and dump' scam Rad is accused of running worked by using email spam campaigns offering purportedly 'inside' information that stocks were 'hot' and should be bought quickly. The emails allegedly were sent using a botnet of infected computers that had fallen victim to hackers.

Investors would buy the stocks, creating more demand and increasing their value. The people behind the scheme would then sell the stocks at high prices, while the fooled investors were left with stocks that weren't worth anywhere near what they paid for them.

The scammers also allegedly hacked the brokerage accounts of third parties and liquidated their stocks, then used the accounts to purchase more of the pump and dump stock.

Rad is charged with conspiracy to commit fraud and transmitting multiple commercial emails containing fraudulent information. If found guilty, he faces five years in prison. µ