Monday, August 11, 2008
The SEC filed a complaint on August 8 in the United States District Court for the District of Connecticut charging Dmitriy Butko, a Russian resident, with fraudulently manipulating the prices of numerous stocks by using the Internet to intrude into the online brokerage accounts of unsuspecting customers at U.S. broker-dealers. The complaint alleges that between October 19, 2006 through November 30, 2006, Butko, or others acting in concert, commandeered the online trading accounts of unwitting investors at various broker-dealers, liquidated existing equity positions and, using the resulting proceeds, purchased thinly traded stocks in order to create the appearance of trading activity and pump up the price of the stocks. The complaint further alleges that in five instances, Butko, in his own account, bought shares in the thinly traded issuers just prior to or at the same time that compromised accounts were made to buy shares, creating the false appearance of market activity. Shortly after the intrusions, Butko sold all of his shares at the inflated prices. In all but one of these instances, Butko realized a profit from his trading, netting a total profit of $60,362.