Tag Archives: Fraud

After re-election, Venezuela’s Maduro faces overseas condemnation

Venezuela's President Nicolas Maduro raises a finger as he is surrounded by supporters while speaking during a gathering after the results of the election were released, outside of the Miraflores Palace in Caracas, Venezuela, May 20, 2018. REUTERS/Carlos Garcia Rawlins

By Alexandra Ulmer and Vivian Sequera

CARACAS (Reuters) – Venezuela’s socialist President Nicolas Maduro faced international condemnation on Monday after his re-election in a vote foes denounced as a farce that cemented autocracy in the crisis-stricken oil-producing nation.

Maduro, 55, hailed his win in Sunday’s vote as a victory against “imperialism,” but his main rival alleged irregularities and refused to recognize the result.

Venezuela’s mainstream opposition boycotted the election, given that two of its most popular leaders were barred from running, authorities had banned the coalition and various of its parties from using their names, and the election board is run by Maduro loyalists. Turnout was under 50 percent.

Thousands of Maduro supporters, many wearing red berets, hugged and danced outside the Miraflores presidential palace, showered in confetti in the yellow, blue and red colors of the Venezuelan national flag.

“The revolution is here to stay!” a jubilant Maduro told the crowd, promising to prioritize economic recovery after five years of recession in the OPEC nation of 30 million people.

“Let’s go, Nico!” his supporters chanted until after midnight during party scenes in downtown Caracas.

“We mustn’t cave to any empire, or go running to the International Monetary Fund as Argentina did. The opposition must leave us alone to govern,” said government supporter Ingrid Sequera, 51. She wore a T-shirt with a logo featuring the eyes of Maduro’s socialist predecessor, the late Hugo Chavez.

Senior U.S. State Department officials declared Sunday’s vote a “sham” and repeated threats to impose sanctions on Venezuela’s all-important oil sector, which is already reeling from falling output, a brain-drain and creaking infrastructure.

Spain, which has led European Union criticism of Maduro, also weighed in. “Venezuela’s electoral process has not respected the most basic democratic standards. Spain and its European partners will study appropriate measures and continue to work to alleviate Venezuelans’ suffering,” tweeted Prime Minister Mariano Rajoy.

In a blistering statement, the 14-nation “Lima Group” of countries in the Americas from Canada to Brazil, said it did not recognize the legitimacy of the vote and would be downgrading diplomatic relations.

The group deplored Venezuela’s “grave humanitarian situation” behind a migrant exodus, and promised to help coordinate with international financial bodies to crack down on corruption and block loans to the government.

However, regional leftist allies of Venezuela, from Cuba to Bolivia, sent their congratulations. China and Russia, which have both poured money into Venezuela in recent years, were also unlikely to join in the international condemnation.

‘TRAGIC CYCLE’ FOR VENEZUELA

The election board said Maduro won 5.8 million votes, versus 1.8 million for his chief challenger Henri Falcon, a former governor who broke with the opposition boycott to stand.

Turnout was 46 percent, the election board said, way down from the 80 percent at the last presidential vote in 2013. Suggesting turnout was even lower, an electoral board source told Reuters 32.3 percent of eligible voters cast ballots by 6 p.m. (2200 GMT) as most polls shut.

The government used ample state resources during the campaign and state workers were pressured to vote.

Falcon called for a new vote, complaining about the government’s placing of nearly 13,000 pro-government stands called “red spots” close to polling stations nationwide.

Mainly poor Venezuelans lined up to scan state-issued “fatherland cards” at red tents after voting, in hope of receiving a “prize” promised by Maduro.

The “fatherland cards” are required to receive benefits including food boxes and money transfers.

Some anti-government activists said the opposition coalition should have fielded a candidate regardless of how uneven the playing field might be. But the opposition coalition, which has been divided for most of the duration of the ‘Chavismo’ movement founded by Chavez after he took office in 1999, appeared united after the vote and said its boycott strategy had paid off.

“I implore Venezuelans not to become demoralized, today Maduro is weaker than ever before. We’re in the final phase of a tragic cycle for our country. The fraud has been exposed and today the world will reject it,” tweeted opposition leader Julio Borges.

It was not yet clear what strategy the opposition would now adopt, but major protests seem unlikely given widespread disillusionment and fatigue. Caracas was calm and many of its streets were empty on Monday morning.

Protesters did, however, barricade some streets in the southern city of Puerto Ordaz, drawing teargas from National Guard soldiers, witnesses said.

ECONOMIC PRESSURES

Maduro, who faces a colossal task turning around Venezuela’s moribund economy, has offered no specifics on changes to two decades of state-led policies. The bolivar currency is down 99 percent over the past year and inflation is at an annual 14,000 percent, according to the National Assembly.

Furthermore, Venezuela’s multiple creditors are considering accelerating claims on unpaid foreign debt, while oil major ConocoPhillips has been taking aggressive action in recent weeks against state oil company PDVSA, as part of its claim for compensation over a 2007 nationalization of its assets in Venezuela.

Though increasingly shunned in the West, Maduro can at least count on the support of China and Russia, which have provided billions of dollars’ funding in recent years.

In Beijing, foreign ministry spokesman Lu Kang said China believed the Venezuelan government and people could handle their own affairs and that everyone should respect the choice of the Venezuelan people.

Asked if China had sent congratulations to Maduro, he said China would “handle this in accordance with diplomatic convention,” but did not elaborate.

 

 

(Reporting by Aexandra Ulmer and Vivian Sequera in Caracas; Additional reporting by Maria Ramirez in Ciudad Guayana; Luc Cohen in Caracas; Felipe Iturrieta in Santiago; Marco Aquino in Lima; and Ben Blanchard in Beijing; Writing by Angus Berwick and Alexandra Ulmer; Editing by Andrew Cawthorne and Frances Kerry)

Apple faces lawsuits after saying it slows down aging iPhones

A salesman checks a customer's iPhone at a mobile phone store in New Delhi, India, July 27, 2016.

By Paresh Dave

SAN FRANCISCO (Reuters) – Apple Inc. defrauded iPhone users by slowing devices without warning to compensate for poor battery performance, according to eight lawsuits filed in various federal courts in the week since the company opened up about the year-old software change.

The tweak may have led iPhone owners to misguided attempts to resolve issues over the last year, the lawsuits contend.

All the lawsuits – filed in U.S. District Courts in California, New York and Illinois – seek class-action to represent potentially millions of iPhone owners nationwide.

A similar case was lodged in an Israeli court on Monday, the newspaper Haaretz reported.

Apple did not respond to an email seeking comment on the filings.

The company acknowledged last week for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge.

Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said.

The disclosure followed a Dec. 18 analysis by Primate Labs, which develops an iPhone performance measuring app, that identified blips in processing speed and concluded that a software change had to be behind them.

One of the lawsuits, filed Thursday in San Francisco, said that “the batteries’ inability to handle the demand created by processor speeds” without the software patch was a defect.

“Rather than curing the battery defect by providing a free battery replacement for all affected iPhones, Apple sought to mask the battery defect,” according to the complaint.

The plaintiff in that case is represented by attorney Jeffrey Fazio, who represented plaintiffs in a $53-million settlement with Apple in 2013 over its handling of iPhone warranty claims.

The problem now seen is that users over the last year could have blamed an aging computer processor for app crashes and sluggish performance – and chose to buy a new phone – when the true cause may have been a weak battery that could have been replaced for a fraction of the cost, some of the lawsuits state.

“If it turns out that consumers would have replaced their battery instead of buying new iPhones had they known the true nature of Apple’s upgrades, you might start to have a better case for some sort of misrepresentation or fraud,” said Rory Van Loo, a Boston University professor specializing in consumer technology law.

But Chris Hoofnagle, faculty director for the Berkeley Center for Law & Technology, said in an email that Apple may not have done wrong.

“We still haven’t come to consumer protection norms” around aging products, Hoofnagle said. Pointing to a device with a security flaw as an example, he said, “the ethical approach could include degrading or even disabling functionality.”

The lawsuits seek unspecified damages in addition to, in some cases, reimbursement. A couple of the complaints seek court orders barring Apple from throttling iPhone computer speeds or requiring notification in future instances.

(Reporting by Paresh Dave; Editing by Leslie Adler)

Pharmacist guilty of fraud, not murder, over U.S. meningitis outbreak

Pharmacist guilty of fraud, not murder, over U.S. meningitis outbreak

By Nate Raymond

BOSTON (Reuters) – A Massachusetts pharmacist was convicted of racketeering and fraud charges but was cleared of murder on Wednesday for his role in a 2012 fungal meningitis outbreak that killed 76 people and sickened hundreds more across the United States.

Jurors found that federal prosecutors in Boston failed to prove Glenn Chin, 49, committed second-degree murder in connection with the deaths of 25 people who were injected with mold-tainted steroids produced at the now-defunct New England Compounding Center.

The federal jury instead found Chin guilty on racketeering, conspiracy and mail fraud charges stemming from his role as the pharmacist who supervised the so-called clean rooms in which NECC’s drugs were made.

The verdict came after a separate jury in March found Barry Cadden, NECC’s co-founder and former president, guilty of racketeering and fraud but similarly cleared him of murder. Cadden, 50, was sentenced in June to nine years in prison.

“No matter what these prosecutors tell you, this was never a murder case, ever, ever, ever,” said Stephen Weymouth, Chin’s lawyer.

He called the verdict a victory, noting that a murder conviction would have exposed Chin to a maximum prison sentence of life. Weymouth said he now expected Chin to receive a prison term no longer than Cadden’s when he is sentenced Jan. 30.

Prosecutors say that 778 people nationwide were sickened after being injected with contaminated steroids produced in unsanitary conditions at Framingham, Massachusetts-based NECC.

The outbreak led Congress in 2013 to pass a law that aimed to clarify the U.S. Food and Drug Administration’s ability to oversee large compounding pharmacies that make custom drugs.

Prosecutors said Chin directed staff in NECC’s clean rooms to skip cleaning despite the presence of insects, mice and mold.

They claimed Chin disregarded the probability that people could die if he failed to ensure drugs were produced in sanitary conditions and were properly sterilized in order to keep up with demand from hospitals nationally for its medicines.

His lawyers countered that Chin never meant for anyone to die. They said blame instead rested with Cadden, who made all of the decisions at NECC and trained Chin on how to produce drugs in the ways that prosecutors contend were unsafe.

Lesser charges were filed against 12 other people associated with NECC. Three have pleaded guilty. A federal judge dismissed charges against two defendants in 2016. Charges remain pending against the rest.

(Reporting by Nate Raymond in Boston; Editing by Andrew Hay)

Venezuela stands by election count despite fraud allegation

Venezuela's President Nicolas Maduro (2nd R) speaks during a meeting with members of the Constituent Assembly in Caracas, Venezuela August 2, 2017. The text in the back reads, "Heroic Venezuela". Miraflores Palace/Handout via REUTERS

By Hugh Bronstein and Cassandra Garrison

CARACAS/LONDON (Reuters) – Venezuela’s president rejected accusations on Wednesday that his government inflated turnout figures from its constituent assembly election, branding them part of an effort to stain what he called a clean and transparent vote.

The company that provides the country’s voting machines said that the government’s claim that 8.1 million votes were cast in Sunday’s poll overestimated the tally by least 1 million.

President Nicolas Maduro also criticized the accuracy of a story reported by Reuters that only 3.7 million people had voted by 5:30 p.m. on Sunday, according to internal electoral council documents, compared with the total 8.1 million ballots counted by authorities.

The documents, which break the data down into Venezuela’s 14,515 polling centers, show that 3,720,465 people had voted by 5.30 p.m. Voting ended at 7 p.m. and election experts said doubling the vote in the last hour and a half would be unlikely.

“We stand by our story,” Reuters global communications chief Abbe Serphos said in an email.

Maduro was defiant.

“This election cannot be stained by anyone, because it was a transparent vote, audited before, during and after the ballots were cast,” he told a televised gathering of supporters.

Electronic voting technology firm Smartmatic, which created the voting system that Venezuela has used since 2004, said the turnout figures had been tampered with.

“We know, without any doubt, that the turnout of the recent election for a National Constituent Assembly was manipulated,” said Smartmatic Chief Executive Antonio Mugica in a press briefing in London, without providing details of the company’s methodology.

“We estimate the difference between the actual participation and the one announced by authorities is at least 1 million votes,” he said.

The opposition, which boycotted the vote, has dismissed the official tally as fraudulent. A high turnout was seen as crucial for leftist Maduro to legitimize the election in the face of wide international criticism.

The assembly will have the power to dissolve the opposition-run congress and is expected to sack the country’s chief prosecutor, who has harshly criticized Maduro this year.

Maduro on Wednesday said the newly-minted superbody will also have the power to strip members of congress of their immunity from prosecution. On Tuesday security forces jailed two of Maduro’s leading critics in a fresh blow to the opposition.

Countries around the world have condemned the assembly as a bid to indefinitely extend Maduro’s rule. He is widely criticized for an economic crisis marked by triple-digit inflation and chronic shortages of food and medicine.

OIL WORKERS MARCH

Maduro says the assembly is necessary to give him the powers needed to bring peace to the country after more than four months of opposition protests punctuated by violent clashes between security forces and hooded demonstrators. More than 120 people have been killed since the unrest began in April.

Maduro said delegates of the 545-member assembly will have their first official session on Friday. The opposition called for a new round of protests on Thursday.

Congress has promised to continue holding sessions despite the election of the new assembly. Last month it also named alternate justices to the Supreme Court in defiance of the top court, which has heavily favored Maduro.

Authorities arrested three of those justices, and four others have taken refuge in the residence of the Chilean ambassador in Caracas.

The United States this week called Maduro a dictator, froze his U.S. assets, and barred Americans from doing business with him. Maduro, like his predecessor and mentor, the late Hugo Chavez, regularly laughs off criticism from Washington even though the United States is Venezuela’s top crude importer.

The European Union said it was mulling a “whole range of actions” on Venezuela. But Maduro continues to enjoy public backing from the Venezuela’s military, though soldiers are increasingly weary of the popular backlash against their role in quelling protests.

Oil workers, whom Maduro considers a bedrock of support, rallied in several energy producing regions of the country on Wednesday.

Chanting and carrying the red Socialist Party flag, they denounced sanctions on the leftist president.

“We are here to show our rejection of the intervention of the United States,” one demonstrator said during a televised rally, calling the sanctions “a political show with harmful economic consequences for the people of Venezuela.”

(Writing by Brian Ellsworth, additional reporting by Deisy Buitrago, Corina Pons and Girish Gupta in Caracas.; Editing by W Simon, Tom Brown and Michael Perry)

FBI warns of surge in wire-transfer fraud via spoofed emails

A computer keyboard is seen in this picture illustration taken in Bordeaux, Southwestern France, August 22, 2016. REUTERS/Regis Duvignau

By Alastair Sharp

(Reuters) – Attempts at cyber wire fraud globally, via emails purporting to be from trusted business associates, surged in the last seven months of 2016, the U.S. Federal Bureau of Investigation said in a warning to businesses.

Fraudsters sought to steal $5.3 billion through schemes known as business email compromise from October 2013 through December, the FBI said in a report released Thursday by its Internet Crime Complaint Center.(http://bit.ly/2qAEVBE)

The figure is up sharply from the FBI’s previous report which said thieves attempted to steal $3.1 billion from October 2013 through May 2016, according to a survey of cases from law enforcement agencies around the world.

The number of business-email compromise cases, in which cyber criminals request wire transfers in emails that look like they are from senior corporate executives or business suppliers who regularly request payments, almost doubled from May to December of last year, rising to 40,203 from 22,143, the FBI said.

The survey does not track how much money was actually lost to criminals.

Robert Holmes, who studies business email compromise for security firm Proofpoint Inc <PFPT.O>, estimated the incidents collated by the FBI represent just 20 percent of the total, and that total actual losses could be as much as double the figures reported by the FBI.

The losses are growing as scammers become more sophisticated, delving deeper into corporate finance departments to find susceptible targets, he said.

“This is not a volume play; it’s a carefully researched play,” he said.

The United States is by far the biggest target market, though fraudsters have started to expand in other developed countries, including Australia, Britain, France and Germany, Holmes said.

The FBI has said that about one in four U.S. victims respond by wiring money to fraudsters. In some of those cases, authorities have been able to identify the crimes in time to help victims recover the funds from banks before the criminals pulled them out of the system.

The U.S. Department of Justice said in March that it had charged a Lithuanian man with orchestrating a fraudulent email scheme that had tricked agents and employees of two U.S.-based internet companies into wiring more than $100 million to overseas bank accounts.

Fraudsters have also used spoofed emails to trick corporate workers into releasing sensitive data, including wage and tax reports, according to the advisory.

(Reporting by Alastair Sharp in Toronto; Editing by Bernadette Baum and Lisa Shumaker)

SEC targets fake stock news on financial websites

The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters in Washington, DC

By Jonathan Stempel

(Reuters) – The U.S. Securities and Exchange Commission on Monday announced a crackdown against alleged stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.

Twenty-seven individuals and entities, including a Hollywood actress, were charged with misleading investors into believing they were reading “independent, unbiased analyses” on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.

According to the SEC, many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks.

The regulator said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.

“This is different from the fraud cases that you usually see us bring,” Stephanie Avakian, acting director of the SEC enforcement division, said on the conference call.

“Here, we allege that the fraud was in presenting the analysis as impartial,” she said. “It was bought and paid for.”

Seventeen defendants including Galena Biopharma Inc , ImmunoCellular Therapeutics Ltd  and Lion Biotechnologies Inc agreed to pay more than $4.8 million, including fines and restitution, to settle, and to refrain from further wrongdoing.

Not all defendants were required to make payments, and Galena, ImmunoCellular and Lion did not admit wrongdoing. None of the websites was charged.

The SEC filed lawsuits against the other 10 defendants in Manhattan federal court.

These defendants include Lidingo Holdings LLC, run by Kamilla Bjorlin, 46, an actress from Encino, California who performs under the name Milla Bjorn; and CSIR Group LLC, a New York firm overseen by Christine Petraglia, 49.

It is unclear whether those defendants have hired lawyers. A lawyer representing Lidingo and Bjorlin in separate litigation had no immediate comment. CSIR and Petraglia did not immediately respond to requests for comment.

The SEC also issued an alert warning investors that articles on investment research websites may not be objective and independent, and that they should never invest based solely on information published there.

Mike Taylor, a Seeking Alpha managing editor, said in an email that website’s policies “act as a strong deterrent against potential promotions,” including documenting “all authors’ claims to not having been compensated by third parties.”

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)

Homeland Security announces steps against H1B visa fraud

FILE PHOTO: U.S. Department of Homeland Security emblem is pictured at the National Cybersecurity & Communications Integration Center (NCCIC) located just outside Washington in Arlington, Virginia September 24, 2010. REUTERS/Hyungwon Kang

By Julia Edwards Ainsley

WASHINGTON (Reuters) – The U.S. Department of Homeland Security announced steps on Monday to prevent the fraudulent use of H1B visas, used by employers to bring in specialized foreign workers temporarily, which appeared to fall short of President Donald Trump’s campaign promises to overhaul the program.

A White House official said Trump may still do more on the program.

Trump had promised to end the lottery system for H1B visas, which gives each applicant an equal chance at 65,000 positions each year.

Lobbyists for businesses who rely on H1B visas, commonly used by the tech sector, had expected Trump to upend the lottery in favor of a system that prioritized workers who are highly skilled and would be highly paid in the United States.

The lottery for fiscal year 2018 opened on Monday without changes.

The start of the lottery was seen by those watching the issue as the unofficial deadline for the Trump administration to enact H1B visa reform, and the failure to meet that deadline signals that Trump’s promised overhaul of the system may be off the table or long delayed.

“More oversight is a good start, but employers can still use the program legally to depress wages and replace American workers. That falls short of the promises President Trump made to protect American workers,” said Peter Robbio, a spokesman for Numbers USA, a Washington-based group that advocates for limiting immigration into the United States.

The Trump administration has taken other steps to crackdown on H1B visa abuse, such as issuing a Justice Department warning to employers and announcing plans to increase transparency on applicants.

“These are important first steps to bring more accountability and transparency to the H1B system,” a White House official said. “The administration is considering several additional options for the president to use his existing authority to ensure federal agencies more rigorously enforce all aspects of the program.”

Tech companies rely on the program to bring in workers with special skills and have lobbied for an expansion of the number of H1B visas awarded.

Proponents of limiting legal immigration, including Trump’s senior adviser Stephen Miller, have argued the program gives jobs that Americans could fill to foreign workers at a less expensive cost.

The measures announced by DHS on Monday focus on site visits by U.S. authorities to employers who use H1B visas.

In future site visits, U.S. Citizenship and Immigration Services agents will investigate incidents where an employer’s basic business information cannot be validated; businesses that have a high ratio of H1B employees compared with U.S. workers; and employers petitioning for H1B workers who work off-site.

(Editing by Matthew Lewis)

Hong Kong police struggle to stop brokerage hacking spree

Electric display chart

By Michelle Price

HONG KONG (Reuters) – Hong Kong police are struggling to deal with digital pump-and-dump schemes targeting brokerages – a little-known type of computer-generated fraud that surged in the Chinese territory last year.

Although the money involved was small – only about $20 million worth of shares – there were 81 such incidents reported in 2016, more than triple the number in 2015, according to police.

In the scheme, criminals invest in thinly traded penny stocks and then manipulate their share prices by ordering trades from hacked brokerage accounts. They earn profits by selling before the fraudulent trades are reported.

After last year’s cyber-heist of $81 million at Bangladesh’s central bank and a series of hacks of ATM’s around the world, authorities fear such pump-and-dump schemes could be increasingly used for electronic theft.

Hong Kong is a favored place for such attacks because of the number of thinly-traded penny stocks in the territory and because its securities industry has fallen behind other financial centers in defending against cyber fraud.

At least seven brokers and eight banks have been targeted in Hong Kong, including HSBC Holdings Plc and Bank of China International (BOCI) Securities, according to regulators and people familiar with confidential investigations.

A spokesman for HSBC declined to comment.

A spokeswoman for BOCI Securities said he could not comment on its case but the brokerage would continue to invest in IT security.

“If you ask regulators in the industry what is the number one threat, not surprisingly it’s all about cyber attacks,” Ashley Alder, CEO of the Hong Kong Securities and Futures Commission (SFC) and chairman of the International Organization of Securities Commissions, said in a speech to the local legislature last week.

“We’ve seen that happen not only in banking but also at brokers in Hong Kong, in particular recent attacks to do with basically hijacking share trading accounts.”

Such schemes surfaced more than a decade ago in the United States. Charles Schwab Corp, E*Trade Financial Corp and JP Morgan Chase & Co. were identified as victims of these schemes in a 2006 complaint filed by the Securities and Exchange Commission.

The pace of attacks reported in the United States has slowed in recent years after big brokerages implemented a variety of strategies to thwart the hacks, said John Reed Stark, a former chief of the Securities and Exchange Commission’s (SEC) Office of Internet Enforcement.

Some use algorithms to identify and halt unusual trading activity, others scrutinize Internet traffic for orders coming from suspicious servers and one stopped permitting customers to use its online trading platform from buying penny stocks, said Stark, who now runs cyber-security consulting firm John Reed Stark Consulting LLC.

But such protections are rare in Hong Kong, where the government has only recently started suggesting security improvements to banks and brokerages which have traditionally considered stock trading to be low-risk.

TWO-FACTOR AUTHENTICATION

The Hong Kong SFC last year told firms to increase surveillance of client transactions and data protection.

Authorities believe that hackers accessed brokerage accounts using stolen or guessed passwords, according to investigators. This might have been thwarted if they were protected with two-factor authentication, the Hong Kong Monetary Authority has said.

Two-factor authentication typically includes a password and a piece of information only the user has, for instance an electronic token with changing numbers.

“Hong Kong is being targeted because they have not instituted the same cyber protections that we see in the U.S. and certain parts of Europe,” said Jeff Cramer, a former U.S. prosecutor.

Cramer, who is managing director with cyber-security investigations firm Berkeley Research Group, said he expects to see more attacks in Hong Kong and perhaps other Asian nations, including China, Japan and South Korea that are also behind in cyber security.

FIGHTING BACK

Such pump and dump cases have proven tough to crack in the United States because the masterminds are typically overseas, using surrogates and pseudonyms to make investments.

Brokerages are typically not required to go public when they are hacked, so cases often only surface when the government files a complaint against suspected cyber criminals, or the hack results in litigation.

The attack involving BOCI Securities year became public after it was sued by a customer that claimed its account was breached.

Trading firm Fast Track Holdings Limited alleged in court documents that somebody hacked into its brokerage account on the afternoon of September 23 using a valid user ID and password. Within 18 minutes, the intruder had emptied the account by spending HK$38 million to buy 49 million shares of thinly traded Pa Shun Pharmaceutical, according to Fast Track.

The stock soared more than 30 percent after the purchase, which was made at a 36 percent premium to the previous day’s closing price, Reuters data shows.

BOCI alerted Fast Track of the suspicious activity an hour later, but it has said in court documents it should not be held financially responsible, saying it found no evidence its systems had been compromised.

Peter Pang, Pa Shun’s CFO, told Reuters the management “would keep an eye to the incident and report to the regulators and the public when necessary”.

One person familiar with the case said Fast Track’s management believes the incident was a pump and dump scam and that Pa Shun was targeted because it is thinly-traded, but it remained unclear who was responsible.

Fast Track’s directors did not respond to requests for comment.

(Additional reporting by Jim Finkle in Boston and Jessica Yu, Katy Wong and Donny Kwok in Hong Kong; Editing by Raju Gopalakrishnan)

Claims of votes by the dead, felons cloud North Carolina’s governor race

Voters fill out their ballots on election day for the U.S. presidential election at Elevation Fire Station in Benson, North Carolina

By Colleen Jenkins

WINSTON-SALEM, N.C. (Reuters) – North Carolina’s gubernatorial race remains undecided 10 days after the Nov. 8 vote and new allegations by the Republican incumbent’s campaign about felons and dead people casting ballots could leave the outcome in limbo for weeks.

Republican Governor Pat McCrory, who is trailing Democratic challenger Roy Cooper by about 5,200 votes, has refused to concede with ballots still being tallied. Under state law, Friday was supposed to be the deadline for counties to certify their results.

But challenges over the validity of hundreds of votes and reviews of provisional ballots are expected to delay the reports from many, if not all, of the state’s 100 counties, elections officials said.

The uncertainty has been punctuated this week by a war of words between Republicans and Democrats, with McCrory’s campaign accusing Cooper of being lax on voter fraud and Cooper’s campaign calling the incumbent dishonest and desperate.

“It is absolutely shameful that Governor McCrory would make these unfounded claims,” said Cooper spokesman Ford Porter. “This is the worst kind of misinformation campaign meant to undermine the results of an election the governor has lost.”

McCrory’s campaign, however, argues it is following the legal process to ensure all legitimate votes are counted.

Protests being filed by registered voters in some 50 counties argue that up to 200 ballots should be thrown out because they were cast under the names of dead people, felons or individuals who voted more than once, according to the campaign.

“These are the initial findings,” McCrory spokesman Ricky Diaz said in a phone interview. “There’s additional cases of voter fraud being discovered each day.”

McCrory representatives also have cited “staggering evidence of voter fraud” in Bladen County that Diaz said could include up to 400 absentee ballots and have called into question the tabulation of about 90,000 ballots in Durham County.

The state elections board said in a statement it was working with counties to make certain the final results were reliable.

A win by Cooper would be the only governorship pick-up for Democrats nationally this year. Republicans, who flipped seats in New Hampshire, Missouri and Vermont, will hold at least 33 governor offices next year, the most for the party since 1922.

(Reporting by Colleen Jenkins; Editing by Bill Trott)

Cyber fraudsters take money out of 20,000 Tesco Bank accounts

A Tesco supermarket is seen, in west London

By Estelle Shirbon

LONDON (Reuters) – The banking arm of Britain’s biggest retailer Tesco was scrambling on Monday to deal with an online attack over the weekend on 40,000 customers’ accounts, 20,000 of which had money removed.

The hack is the first on a British bank known to have resulted in customers losing money, adding to growing concerns about the British financial sector’s vulnerabilities to cyber attacks, which have jumped in frequency over the past two years.

Tesco Bank, which manages 136,000 current accounts, stopped all online transactions while it worked to resume normal service, although customers could still use their bank cards in shops and to withdraw money from cash machines.

“Any financial loss that results from this fraudulent activity will be borne by the bank,” Tesco Bank Chief Executive Benny Higgins told BBC radio. “Customers are not at financial risk.”

“We think it would be relatively small amounts that have come out but we’re still working on that,” he said, adding that he expected the cost of refunding customers would be “a big number but not a huge number”.

Shares in supermarket chain Tesco, which wholly owns Tesco Bank, were down 1.2 percent at 200.20 pence by 1030 GMT.

The bank is a minnow in Britain’s retail banking market, with about 2 percent of current accounts, and represents only a small part of Tesco’s overall business.

It contributed 503 million pounds ($623.4 million) to the group’s revenue of 24.4 billion pounds in the first half of its 2016-17 financial year.

But while the financial hit to the group may be limited, Tesco Bank risks serious reputational damage from an attack that affected 29 percent of its customer current accounts.

Other British banks have been targeted by cyber attacks in recent years, but the Financial Conduct Authority (FCA) which regulates the sector said it was not aware of any previous incident in which customers had lost money.

Reported attacks on financial institutions in Britain have risen from just five in 2014 to over 75 so far this year, according to FCA data, but bank executives and providers of security systems say there are many more unreported attacks.

HSBC issued a series of apologies to customers earlier this year after its UK personal banking websites were shut down by a “denial of service” attack, but no customer funds were at threat during that breach.

Cliff Moyce, global head of financial services at DataArt, a network of technology consulting and software services firms, said reduced staffing levels over the weekend were likely to have been one of the reasons for the impact of the hack.

“The clever part was doing it over the weekend when banks are typically understaffed, and will respond more slowly,” he said in a comment emailed to media.

“Automated fraud detection systems appear to have worked well, but a lack of people at desks will not have helped.”

Other well-known British brands hit by significant cyber attacks over the past year include telecoms firms TalkTalk and Vodafone, business software provider Sage and electronic goods retailer Dixons Carphone.

(Additional reporting by Michael Holden, James Davey and Huw Jones; Editing by Greg Mahlich)