Judge freezes assets of accused account hackers

WASHINGTON (Reuters) - A U.S. judge froze the assets of Russian hackers who allegedly hijacked online brokerage accounts and then placed unauthorized trades in order to manipulate markets.

The Securities and Exchange Commission said on Tuesday that U.S. District Judge Richard Holwell had granted its request on Monday to freeze the assets of BroCo Investments Inc and Valery Maltsev, BroCo's president and sole officer, pending a preliminary hearing.

In its complaint, filed in Manhattan federal court, the SEC alleged that BroCo and Maltsev had manipulated the markets of at least 38 securities issuers between August 2009 and December 2009 by acquiring positions in their own accounts before placing buy orders minutes later at above-market prices in the compromised accounts.

They then allegedly sold the positions in their own accounts at artificially inflated prices.

In other cases, the complaint alleged, the defendants profited "by covering short positions previously established in their account while placing unauthorized sell orders through the compromised accounts at substantially lower prices."

The SEC said that online broker-dealers whose customers' accounts were compromised lost at least $603,000 as a result of the defendants' conduct.

BroCo was formed in April 2008 and is located in St. Petersburg, Russia, according to the SEC complaint. The company's Web site, however, places its location in Limassol, Cyprus.

The complaint said that Maltsev is thought to be a 36-year-old Russian residing in or near St. Petersburg.

The compliant is in U.S. District Court for the Southern District of New York, Case No. 10-cv-2217.

(Reporting by Dan Margolies, editing by Gerald E. McCormick)