Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Monday, April 9, 2007

SEC Alleges Pump and Dump Identity Theft Scheme

The SEC announced that  it  obtained  a  temporary  restraining order and an emergency asset freeze  to  halt  a  market  manipulation scheme that used stolen identities of innocent victims  to  manipulate the markets.  In an emergency federal court  action  filed  April  5,  in  the  U.S. District Court for the Southern District of New York,  the  Commission charged Alexis Ampudia, a 22-year old Panamanian citizen and  resident of Brooklyn, N.Y., with conducting a fraudulent scheme  involving  the manipulation of the prices of numerous securities by  using  brokerage accounts he had opened in the names of identity theft victims, without their  knowledge  or  consent.  The  Commission  alleges  that,  since November 2006, Ampudia made at least $140,000 in unlawful  profits  by manipulating  the  securities  of  at  least  five   publicly   traded companies.  The Commission's complaint alleges that Ampudia first purchased shares of small, thinly-traded companies, with low share prices, through  his own online trading account.  Immediately  or  soon  thereafter,  using online brokerage accounts Ampudia had opened in the names of  identity theft victims, Ampudia placed a series of large  purchase  orders  for the  targeted  securities,  for  the  sole  purpose  of   artificially increasing the price of the securities he had just purchased at  lower prices.  These  purchases  created  buying  pressure  and  the   false appearance of legitimate trading activity, which caused the  price  of the securities to greatly increase. Ampudia then, at  a  profit,  sold the shares he had earlier purchased in his own account.

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