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Friday, November 03, 2006

Buy Low and Sell High - Hackers' Stock Trading Strategy

Both E-Trade and TD Ameritrade brokerage firms had their sites hacked recently. After gaining access to customer accounts at these firms, the hackers allegedly made numerous trades, buying low-priced, low volume stocks. By buying these stocks in large numbers using the brokerage firms' customer accounts, they drove up the prices of these stocks. The hackers already owned these stocks in separate accounts, and after driving up the prices of these stocks, they sold their own stocks at profit.

As this pump-and-dump strategy indicates, hackers have been becoming increasingly sophisticated in their approach and this is becoming an increasing concern for businesses and customers. Having been subject to ID theft myself, I know it's a big nuisance and takes a lot of time, money and headaches to clear up things. E-Trade estimates that its customers lost several million in losses. However, the customers at E-Trade and TD Ameritrade fortunately won't at least be losing financially for any losses, as both the brokerage firms will be covering their losses.

posted by Ruby @ 7:13 AM

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