The Australian Federal Police (AFP) and Australian Securities and Investment Commission (ASIC) have uncovered a scam using hacked retail investor accounts to make unauthorised trades on the Australian Stock Exchange (ASX).
The NSW Supreme Court has since ordered that the sum of $77,000 profited from the trades would be held, after the AFP and ASIC's Operation Emerald uncovered Russian hackers trading penny stocks through Morgan Stanley Australia.
The sum, while appearing small, is an important test case for the regulatory authorities, who have to deal with seriously outdated legislation that struggles to contain modern criminal activity in cyberspace.
ASIC Commissioner, Cathie Armour, said it has been working with partners overseas to stop this kind of market tinkering, by working with international regulators such as the Intermarket Surveillance Group.
"ASIC has a world-class surveillance system to gather, match and analyse data to uncover misconduct, and its staff continue to monitor and detect suspicious trading activity and work with market participants to ensure account hacking is swiftly identified and stopped," she said.
The suspicious trades occurred between August 18, 2014, and October 21, 2014. ASIC claims that the trades were made by a Russian hacker who hacked retail client accounts held with Commonwealth Securities, Etrade Australia and Australian Investment Exchange.
The hacker targeted 13 penny stocks listed on the ASX and traded them to manipulate them to create artificially inflated prices, trading out and reaping the profits. ASIC spotted the fraud and passed it on to the AFP which put it to the Court under the Proceeds of Crime Act 2002. The matter has been adjourned until February 2016.
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