The
Securities and Exchange Commission (SEC ) charged Russian national Dmitrii
Yevgenyevich Kushnarev with orchestrating a seven-year market manipulation
scheme that generated approximately $31 million in gross proceeds through
hacking and trading on compromised U.S. retail brokerage accounts.
The
58-year-old Russian, who previously served prison time in Russia for fraud
from 2002-2004, allegedly used at least 23 false identities to mask his
involvement in what investigators describe as a sophisticated
“account takeover attack” operation. According to the complaint filed
in federal court in Atlanta, Kushnarev’s scheme ran from March 2014
through at least May 2021.
Kushnarev
and unknown co-conspirators compromised hundreds of U.S. and Canadian retail
brokerage accounts at no fewer than 10 different firms, forcing these
accounts to purchase securities in over 380 different companies listed on
the NYSE, NASDAQ, and OTC Markets, the SEC alleges. The unauthorized purchases
temporarily drove up prices and trading volumes in thinly traded
securities, allowing Kushnarev to profit by selling shares from his fake
accounts into the artificially inflated market.
The complaint
details how Kushnarev maintained at least 38 brokerage accounts, 18 in the U.S.
and 20 foreign accounts with U.S. market access, under fabricated
identities including names like “Vitaly Ershov,” “Oskaras
Korsunovas,” and “Ruben Salguero Romero.” To establish these
accounts, he submitted false passports and identity documents, claiming
citizenship in countries ranging from Poland to Malta to Spain.
According
to the SEC filing, “To establish these alias accounts, Kushnarev submitted
account opening applications containing false information, including false
names, false residential addresses, false citizenship and employment
information, and other false personal data.”
You may also like: SEC and CFTC Hit Fraudsters with $4M in Penalties in One Day
Operation Evolved to
Target Options Trading
Starting in
April 2019, Kushnarev shifted his focus from manipulating stock prices to
exploiting the options market. He would purchase out-of-the-money call and put
options at low prices, then force hacked accounts to buy the same options
at artificially inflated prices, according to court documents.
One example
from May 2021 shows how lucrative this approach became. Using an
account under the alias “Ruben Salguero Romero,” Kushnarev bought
put options on First Business Financial Services stock for $0.20 to $0.50
per contract. Days later, a hacked U.S. brokerage account was forced to
purchase 78 of the same option contracts for $2.00 each, generating $15,600 in
sales proceeds and $12,680 in net profits for Kushnarev.
The case
demonstrates significant international coordination, with the SEC
acknowledging assistance from regulatory authorities across more than 25
countries and territories. European regulators from Germany’s BaFin to the
Malta Financial Services Authority contributed to the investigation, alongside
agencies from Canada, Hong Kong, and The Bahamas.
I also recommend reading other SEC-related stories:
The
Securities and Exchange Commission (SEC ) charged Russian national Dmitrii
Yevgenyevich Kushnarev with orchestrating a seven-year market manipulation
scheme that generated approximately $31 million in gross proceeds through
hacking and trading on compromised U.S. retail brokerage accounts.
The
58-year-old Russian, who previously served prison time in Russia for fraud
from 2002-2004, allegedly used at least 23 false identities to mask his
involvement in what investigators describe as a sophisticated
“account takeover attack” operation. According to the complaint filed
in federal court in Atlanta, Kushnarev’s scheme ran from March 2014
through at least May 2021.
Kushnarev
and unknown co-conspirators compromised hundreds of U.S. and Canadian retail
brokerage accounts at no fewer than 10 different firms, forcing these
accounts to purchase securities in over 380 different companies listed on
the NYSE, NASDAQ, and OTC Markets, the SEC alleges. The unauthorized purchases
temporarily drove up prices and trading volumes in thinly traded
securities, allowing Kushnarev to profit by selling shares from his fake
accounts into the artificially inflated market.
The complaint
details how Kushnarev maintained at least 38 brokerage accounts, 18 in the U.S.
and 20 foreign accounts with U.S. market access, under fabricated
identities including names like “Vitaly Ershov,” “Oskaras
Korsunovas,” and “Ruben Salguero Romero.” To establish these
accounts, he submitted false passports and identity documents, claiming
citizenship in countries ranging from Poland to Malta to Spain.
According
to the SEC filing, “To establish these alias accounts, Kushnarev submitted
account opening applications containing false information, including false
names, false residential addresses, false citizenship and employment
information, and other false personal data.”
You may also like: SEC and CFTC Hit Fraudsters with $4M in Penalties in One Day
Operation Evolved to
Target Options Trading
Starting in
April 2019, Kushnarev shifted his focus from manipulating stock prices to
exploiting the options market. He would purchase out-of-the-money call and put
options at low prices, then force hacked accounts to buy the same options
at artificially inflated prices, according to court documents.
One example
from May 2021 shows how lucrative this approach became. Using an
account under the alias “Ruben Salguero Romero,” Kushnarev bought
put options on First Business Financial Services stock for $0.20 to $0.50
per contract. Days later, a hacked U.S. brokerage account was forced to
purchase 78 of the same option contracts for $2.00 each, generating $15,600 in
sales proceeds and $12,680 in net profits for Kushnarev.
The case
demonstrates significant international coordination, with the SEC
acknowledging assistance from regulatory authorities across more than 25
countries and territories. European regulators from Germany’s BaFin to the
Malta Financial Services Authority contributed to the investigation, alongside
agencies from Canada, Hong Kong, and The Bahamas.
I also recommend reading other SEC-related stories: