The U.S. Securities and Exchange Commission has obtained an emergency court order freezing assets in a Latvian-based bank’s trading account that it claims was being used to conduct a high-tech market manipulation scheme.

In an emergency federal court action filed in the U.S. District Court for the District of Columbia, the commission alleged that the account, maintained by relief defendant JSC Parex Bank based in Riga, Latvia, had been used by one or more unknown offshore sub-account holders to launch a “pump and dump” manipulation scheme involving the stocks of 15 different public companies.

“As part of the scheme, the unknown traders hacked into unsuspecting investors’ online brokerage accounts at seven different brokerage firms, selling off investors’ positions and using the proceeds to pump up the market for the stocks subject to the scheme,” the SEC explained. “Through this technique, the unknown traders generated at least $732,941 in illicit profits and cost U.S. brokerages some $2 million in losses.” These allegations have not been proven.

Similar schemes have reportedly been carried out in Canada. Last year, the Investment Dealers Association of Canada issued a warning to investors and its firms about hackers compromising online accounts to carry out pump-and-dump scams.

The SEC’s enforcement action is the third filed in as many months involving market manipulation schemes conducted through online account intrusions. SEC enforcement deputy director Peter Bresnan stated, “In today’s global economy, where con artists can misuse computer technology to defraud innocent U.S. investors from far beyond our borders, freezing the unlawful profits of those behind these intrusion schemes is especially important. Working to prevent injury to U.S. investors from intrusions into online brokerage accounts is a top priority of the Enforcement Division.”

“Using sophisticated computer hacking and identity theft techniques to break into the accounts of innocent online brokerage customers,” said SEC Office of Internet Enforcement Chief John Reed Stark, “these perpetrators effectively cut out the middleman of the old fashioned pump-and-dump scheme, eliminating phony stock promotions, creating their own artificial trading demand, and consummating their frauds in as little time as a couple of hours.”

In this case, in response to the commission’s motion, the court issued a temporary restraining order freezing what the SEC alleges comprise fraudulent profits held in JSC Parex’s omnibus trading account.

The commission’s complaint alleges a complex scheme that combines electronic intrusions into online brokerage accounts with a traditional market manipulation. It further alleges that the unknown traders violated the Securities Act , and it seeks permanent injunctions against future violations by the unknown traders, and disgorgement of all the unknown traders’ ill-gotten gains, including prejudgment interest and civil penalties. The complaint also seeks a final judgment requiring Parex to disgorge any assets it may have obtained as a result of the unknown traders’ scheme.

The SEC acknowledged the assistance of the NASD in this case.