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Most Read Contributor in United States, November 2018
The SEC charged a Philadelphia-based trader with
several Securities Act and Exchange Act violations for allegedly
participating in and profiting from a "brokerage account
takeover" scheme.
In a Complaint filed in the U.S. District Court for
the Eastern District of New York, the SEC alleged that Joseph
Willner executed unauthorized trades in coordination with an
individual who secretly accessed brokerage accounts of victims and
placed securities trades in order to manipulate prices. According
to the SEC, Mr. Willner entered into a profit-sharing agreement
with the individual, with Mr. Willner paying the individual after
taking advantage of artificially inflated prices in order to make
profitable trades. The SEC claimed that the individual would use
the illegally accessed accounts to place orders at artificial price
points, often opposite orders that Mr. Willner had placed through
his own brokerage account. Throughout his participation in the
scheme, the SEC said, Mr. Willner took measures to conceal his
identity by using a pseudonym in communications with the
individual.
Mr. Willner allegedly transferred the proceeds by converting
U.S. dollars to bitcoins, and transmitting these bitcoins to the
individual. The SEC claimed that he was able to generate over
$700,000 in illicit profits through his participation in the
scheme. As a result, Mr. Willner was charged with violating
Securities Act Sections 17(a)(1) and
(3), and
Exchange Act Sections 9(a)(2) and
10(b) and
Rules 10b-5(a) and
(c).
Commentary / Joseph V. Moreno
This case, involving unauthorized access to brokerage accounts,
embodies two of the SEC's current priorities — protecting
retail investors and addressing new and innovative schemes to
commit high-tech cyber-fraud. The case also illustrates how bitcoin
may be used to hide the proceeds of illicit gains. Expect to see
the SEC boosting oversight and regulation in the digital currency
space. And expect the new Cyber Unit to be front-and-center in
terms of resources and priorities.
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guide to the subject matter. Specialist advice should be sought
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