VeriSign releases stock fraud protection service

VeriSign has adapted its fraud protection service to help safeguard against a common form of stock trading fraud.

The new module for the VeriSign Identity Protection (VIP) Fraud Detection Service, the Stock Trading Module, uses a self-learning behavioural engine to spot a form of trading fraud known as 'pump-and-dump' fraud.

Pump-and-dump fraud is a process whereby criminals buy large amounts of shares in a company with a low stock price then use various techniques to 'pump up' the share price.

Once they have achieved this, they sell off their shares, causing the stock price to plummet and forcing investors to pick up the pieces.

This has traditionally been done by methods such as planting false rumours, but modern pump-and-dump fraudsters use more sophisticated methods such as conducting unauthorised share purchases through co-opted accounts.

The VeriSign suite has been designed to help prevent accounts from being breached and reduce traders' losses from pump-and-dump scams.

According to Dow Jones Newswires, one pump-and-dump scheme before the courts in North Carolina is alleged to have netted more than $31 million in profits.