Man accused of hack-pump-dump scam extradited to USA

Pump and dump scam
If you were following security trends a few years ago you’ll have been very familiar with what is known as the pump-and-dump stock scam.

What happened was spammers would use junk email to pump up the price of a thinly-traded stock (generally by spreading fake good news about a company), only to make their fortune shortly afterwards when they dump their own holding.

The problem became so large that the US Securities and Exchange Commission (SEC) felt forced to suspend trading in a number of companies as they were found to be commonly referenced in pump-and-dump stock email campaigns.

Pump-and-dump scams, which had once accounted for some 25% of all spam, ultimately went the way of the vinyl record and are much less commonly encountered today.

Last September I reported on a new style of pump-and-dump share price manipulation scam. Thirugnanam Ramanathan, a native of Chennai, India, and legal resident of Malaysia, was found guilty of hacking into stock market investment accounts, selling their holdings and buying stocks in lightly-traded stocks before (inevitably) dumping his own holdings after making a profit.

According to media reports, 34-year-old Jaisankar Marimuthu, an alleged accomplice of Ramanathan’s, was extradited to the USA last month from a Hong Kong jail, where he had been held following conviction on similar offences related to the Hong Kong stock market.

Marimuthu has pleaded not guilty to the charges.

Guilty or not – one thing is clear. Although the credit crunch has helped make share price manipulation by hackers less common, it’s more important than ever that the public’s confidence in online share trading and the security of financial systems is not shaken.