by Jeremy Kirk

Russian Charged with Hacking Into Brokerage Accounts

Apr 18, 20122 mins

Petr Murmylyuk allegedly caused US$1 million in losses to Fidelity, Scottrade, E*Trade, and Schwab

A Russian national has been charged in the U.S. with allegedly hacking into brokerage accounts and executing fraudulent trades, which several brokerage houses claim caused US$1 million in losses.

Petr Murmylyuk, 31, who lived in New York, is charged with conspiracy to commit wire fraud, unauthorized access to computers and securities fraud, according to the U.S. District Attorney’s Office in New Jersey. If convicted, Murmylyuk could face up to five years in prison and a $250,000 fine.

Authorities allege Murmylyuk participated in a criminal ring that gained unauthorized access to brokerage accounts and then changed phone numbers and addresses on file to prevent victims from noticing trades. The U.S. Securities and Exchange Commission is also filing a parallel civil action against Murmylyuk, according to a news release.

The victims’ accounts were then used to make illogical trades that allegedly profited the gang. Authorities said in one version of the fraud, the hacked accounts were used to sell options contracts to “profit” accounts controlled by the accused, then purchase those options contracts back minutes later for up to nine times the price.

In another version, the profit accounts were used to offer a short sale of securities at prices over market price, then have the victim accounts buy the securities.

Murmylyuk is accused with a conspirator of recruiting foreign nationals to open bank accounts to receive the illegal proceeds, prosecutors said. As a result of the fraud, Fidelity, Scottrade, E*Trade, and Schwab said they lost US$1 million.

At the time he was charged, Murmylyuk was already in custody facing charges stemming from an investigation by the Manhattan District Attorney’s Office.

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