The Securities and Exchange Commission (“SEC”) charged Igors Nagaicevs, a 34 year old Latvian citizen, with conducting a widespread online account intrusion scheme in which he manipulated the prices of more than 100 NYSE and Nasdaq securities, and caused more than $2 million in harm to U.S. investors.
According to the SEC complaint, between June 2009 and August 2010, Nagaicevs hijacked online accounts and made unauthorized purchases and sales of securities. By doing this, Nagaicevs manipulated the prices of stocks in which he already held positions, and was thereby later able to sell at a profit. The entire pattern was always completed within the same trading day, often within minutes. Nagaicevs engaged in this pattern on at least 159 occasions, generating more than $850,000.00 in illegal profits. The unauthorized activity caused losses in excess of $2 million, which were reimbursed by the broker-dealer firms that carried the hijacked accounts.
Simultaneously, the SEC initiated administrative actions against the four electronic trading firms that allowed Nagaicevs to trade through their platforms without registering him as broker. The SEC stated, “[t]hese firms provided unfettered access to trade in the U.S. securities markets on an essentially anonymous basis.” The trading firms named in the SEC’s administrative actions relating to this scam are: (1) Alchemy Ventures, Inc. of San Mateo, California; (2) KM Capital Management, LLC of Philadelphia; (3) Zanshin Enterprises, LLC of Boise, Idaho; and (4) Mercury Capital of La Jolla, California. The SEC’s administrative action will determine whether the non-settling trading firms and principals violated the broker registration provisions of the federal securities laws.