Joseph P. Willner has been charged by SEC with “participating in a scheme to access the brokerage accounts of more than 100 unwitting victims and make unauthorized trades to artificially affect the stock prices of various companies,” according to a press release.
The individual who “allegedly transferred proceeds of profitable trades to a digital currency company that converts U.S. dollars to Bitcoin and then transmitted the bitcoins as payment,” allegedly:
“Generated at least $700,000 in illicit profits by trading in the same securities in his own accounts and taking advantage of the artificial stock prices that resulted from the unauthorized trades placed in the victims’ accounts.”
It’s unclear why they are calling the trades unauthorized, or how Willner gained access to these accounts, but presumably the scheme was buying stocks through his own personal account, then inflating the price of assets he bought by buying them with the victims accounts.
”Legal trading too hard,” apparently he said “while communicating with at least one other individual through online direct messaging applications using a pseudonym, according to the SEC’s complaint.”
That’s how his activities were detected, “despite his efforts to disguise his real identity,” SEC says, with Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, stating:
”Account takeovers are an increasingly significant threat to retail investors, and it is exactly the type of fraud our new Cyber Unit is focusing on.
We are committing substantial resources to combating cyber-based threats to protect investors and our markets from intruders who manipulate the system for their own illicit gain.”
The Securities and Exchange Commission (SEC) has recently launched a cyber unit which, among other things, focuses on this space “targeting cyber-related misconduct,” including online market manipulation, hacking, or ICOs.
This arrest is part of it, with SEC now asking for “the return of ill-gotten gains plus interest and penalties and a permanent injunction.”
That’s however just half of the potential punishment because “the U.S. Attorney’s Office for the Eastern District of New York and the U.S. Department of Justice Criminal Division’s Fraud Section filed criminal charges against Willner.”
That should, perhaps, persuade him to find legal trading a bit easier next time. While the message for the rest appears to be clear. SEC is watching.