An Indian man convicted of hacking into internet brokerage accounts to manipulate stock prices has been jailed in the US for two years.

Thirugnanam Ramanathan, 35, originally of Chennai, India, broke into customer investment accounts held with brokerages including TD Ameritrade, Fidelity and E*Trade. He dumped existing holdings and used the funds to buy lightly-traded stock, thereby increasing its price.

Prior to the move, Ramanathan and his alleged accomplices had bought stock in the same little regarded firms, allowing them to sell the shares at a tidy profit after its value had been artificially inflated. At least 60 customers with nine US brokerage firms fell victim to the scam, which operated between February and December 2006.

Ramanathan pleaded guilty to one count of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft over the scam back in June. At a sentencing hearing before US District Judge Laurie Smith Camp, he was ordered to pay restitution of $362,000 and to serve three years on probation in addition to his main sentence of two years behind bars.

Conventional pump and dump scams rely on attempting to trick would-be investors into pumping money into essentially worthless stock on the basis of false rumours spread using spam email. The scam orchestrated by Ramanathan is more sophisticated because it involved an element of hacking.

Ramanathan was cuffed in Hong Kong, and extradited following an FBI investigation that traced one of the instances of stock manipulation back to an IP address used by a Bangkok Hotel he was staying in at the time. Two other suspects - named as Jaisankar Marimuthu, 33, and Chockalingham Ramanathan, 34 - have also been charged. Marimuthu is awaiting extradition from Hong Kong while Ramanathan remains at large.

More background on the case can be found in a US Department of Justice press.

Source: The Register

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