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US Charges English Twins Over $1.2m 'Stock Robot' Fraud

timothy posted more than 2 years ago | from the not-all-english-twins-of-course dept.

Crime 114

peetm writes "Twin brothers from England face U.S. civil charges for allegedly defrauding investors out of $1.2m (£745,000) through a bogus stock-picking robot. The twins, Alexander and Thomas Hunter, were just 16 years old when they devised the scam — which fooled around 75,000 people, according to U.S. officials."

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Had to read the article... (4, Insightful)

Anonymous Coward | more than 2 years ago | (#39761213)

Needed to figure out what exactly was bogus about this since there shouldn't be anything too wrong about someone recommending stocks that fail even with a "robot".

The Securities and Exchange Commission said the stocks "picked" were actually firms that paid the twins hefty fees

I assume it's because there's a difference between just being bad stocks and being bribed into recommending stocks.

Re:Had to read the article... (4, Insightful)

TFAFalcon (1839122) | more than 2 years ago | (#39761227)

Didn't some banks recommend people buy stocks and derivatives that they themselves were trying to get rid of? I suppose they're going to be charged with fraud too?

Re:Had to read the article... (4, Informative)

cultiv8 (1660093) | more than 2 years ago | (#39761245)

Nope.

The Hunters claimed that "Michael Cohen" had developed a Goldman Sachs trading algorithm that reaped billions in profits.

that's what they did wrong.

Re:Had to read the article... (5, Interesting)

Anonymous Coward | more than 2 years ago | (#39761441)

"Nope"

Yes they did.
GS recommended and sold products that they internally classified as "shitty" - while at the same time they betted on the dropping of value of those product. As expected the value of those products did drop, GS clients lost big and GS itself won big.
It's insider trading at the highest level.

Sen. Levin Grills Goldman Sachs Exec On "Shitty Deal" E-mail
http://www.youtube.com/watch?v=gLx2Xc1EXLg

Re:Had to read the article... (2)

MaskedSlacker (911878) | more than 2 years ago | (#39762567)

I think his "Nope" was in answer to the question of them being charged with fraud (as they should be) which will never happen, not the question of whether or not they'd committed said fraud.

Re:Had to read the article... (5, Funny)

Opportunist (166417) | more than 2 years ago | (#39762641)

criminal, -s, n: Someone unable to buy laws to make his actions legal.

Re:Had to read the article... (0)

Weatherlawyer (2596357) | more than 2 years ago | (#39763287)

criminal, -s, n: Someone unable to buy laws to make his actions legal.

I love you. Please enter politics and have my vote. Is it true that it is illegal to threaten to kill the US Presidunce? Who invented that one?

Re:Had to read the article... (1)

TheRealMindChild (743925) | more than 2 years ago | (#39763577)

Well, let's be fair. You never threaten someone directly. Say things like "You're gonna die!" instead of "I'm going to kill you!". The former can be argued because it is a true fact and your intentions are ambiguous. I still wouldn't try shouting either at the President

Re:Had to read the article... (0)

Anonymous Coward | more than 2 years ago | (#39761267)

In an ideal world, yeah.

Re:Had to read the article... (1)

michelcolman (1208008) | more than 2 years ago | (#39761429)

What do you mean "some" banks? I assume you really meant "most" banks?

I know one thing: whenever my (regular, non-investment) banker sends me a message recommending a stock (which in my case is very rare, only happened a few times in the last 15 years or so), the first thing I will do is buy put options on that stock. I would have made a fortune if I had done that on their last few recommendations (Lernout & Hauspie, Fortis,...)

'put' option (4, Informative)

KingAlanI (1270538) | more than 2 years ago | (#39761937)

to clarify the term: a 'put' is an option to sell at a certain price. so one makes money if the market price is lower than the option price.
It's a bet that the item's price will go down, and in this case a distrust of his banker's stock tips.

('call' option is the other way around)

Re:Had to read the article... (3, Informative)

Tom (822) | more than 2 years ago | (#39761571)

Didn't some banks recommend people buy stocks and derivatives that they themselves were trying to get rid of? I suppose they're going to be charged with fraud too?

No. Other than the teen twins, they did their homework and bought the proper laws first. If you do your paperwork properly (i.e. get registrated, "regulated" and put the proper disclaimers on the stuff you sell) then you can pretty much do whatever you want. Oh, and if you blow up, the government will bail you out.

Re:Had to read the article... (0)

Anonymous Coward | more than 2 years ago | (#39762861)

My local auto dealer recommeded I buy something they were trying to get rid of, but I don't think a fraud case would go anywhere.

Re:Had to read the article... (1)

tomhath (637240) | more than 2 years ago | (#39763941)

If your local auto dealer knowingly lied about the car's condition, mileage, etc. they would be committing fraud, and that case could go far.

Re:Had to read the article... (1)

Bert64 (520050) | more than 2 years ago | (#39761241)

That sounds like paid advertising, the fact that people are stupid enough not to verify the independence and credibility of their sources is a separate matter... It happens all over the place too, people trust salesmen and third party organisations that are funded by the suppliers of the products they recommend, and never bother to seek truly independent advice.

Re:Had to read the article... (3, Informative)

Nursie (632944) | more than 2 years ago | (#39761251)

It can be very hard to find someone independant and trustworthy, which is why we have all sorts of rules, loads of legislation and pretty stiff penatlies for this sort of stuff. Otherwise assholes (of the corporate or independant variety) defraud people, like what happened here.

Re:Had to read the article... (4, Informative)

DaveGod (703167) | more than 2 years ago | (#39761631)

Needed to figure out what exactly was bogus about this since there shouldn't be anything too wrong about someone recommending stocks that fail even with a "robot".

The Securities and Exchange Commission said the stocks "picked" were actually firms that paid the twins hefty fees

I assume it's because there's a difference between just being bad stocks and being bribed into recommending stocks.

This is a good question, though I think you missed the answer (for the UK side of things anyway) from TFA:

In November, Newcastle Crown Court ordered Alexander Hunter to pay back nearly $1m after he admitted providing unregulated financial advice. He was given a suspended 12-month prison sentence.

In the UK the first mechanism to protect the public from investment-related fraud (which this blatantly is) is that if you give financial advice you have to be signed up to the Financial Services Authority. That is rigorously enforced and isn't trivial to accomplish so right off the bat they've got a very solid case against basically all the fraudsters except those that probably could make a decent living being bona fide. That's what these twins have been caught by.

To protect against the registered guys, well signing up to the FSA subjects you to rules and by-laws (laws that only apply to specific people) which require specific things and hold you to a much higher standard than is generally applied of the public - as you can see here [fsahandbook.info] , the industry is heavily regulated. I don't know much on the details of the FSA rules, but at first glance these twins seem to fail more than half of the fundamental principles [fsahandbook.info] .

On top of that, these guys probably could have been caught under the Fraud Act 2006 [legislation.gov.uk] (though Wikipedia has a decent summary [wikipedia.org] ) since a) they made specific factual claims about their products which they knew were not true and b) as you point out they were bribed into recommending stocks - being paid to do so would actually be OK if only they'd disclosed it.

Although punishment under the Fraud Act is more severe, and at first glance appears most appropriate given these guys were clearly intentionally defrauding their customers, it still hard to win in court whereas getting them for not being FSA regulated is easy.

Incidentally, some of these rules cross borders in both directions - someone based overseas marketing their dodgy dealings in the UK can still be subject to UK laws, while a UK firm can be subject to UK laws while operating overseas (even if they do it via a third party based there).

I gather the US has a very-broadly similar set of tools via the SEC.

i dont know where to begin on how wrong this is (0)

Anonymous Coward | more than 2 years ago | (#39763411)

the Credit Default Swap was invented by JP Morgan's group - - In London.

the AIG company had all of its CDO / CDS exposure - - in it's London branch.

they did this --because London was less regulated than the US--.

Many of the banks involved in the CDO scam were -- from the UK --, including RBS.

Barclay's and HSBC, which had their names on a huge number of Synthetic CDOs, almost all of which were flat out frauds, was based -- In London--.

I do not say this because I'm talking out my ass, I say it because if you read very many of the crisis books, from "All the Devils are Here" to "Fool's Gold", you will find that is what the people in the industry themselves were saying. Go to London, there are less regulations.

 

Re:i dont know where to begin on how wrong this is (1)

cdrguru (88047) | more than 2 years ago | (#39764895)

Deutsch Bank was a huge player in the selling of "insurance" against mortgage-backed securities. But, they were doing the selling in New York and other places as well.

Mechanical Turk (4, Insightful)

srussia (884021) | more than 2 years ago | (#39761215)

21st century version of the Mechanical Turk [wikipedia.org]

I knew it! (5, Funny)

lxs (131946) | more than 2 years ago | (#39761219)

Twins are evil.

Re:I knew it! (1)

Anonymous Coward | more than 2 years ago | (#39761295)

Only one, usually the one with the beard.

Re:I knew it! (-1)

Anonymous Coward | more than 2 years ago | (#39761413)

Usually, yes... in some cases neither twin has a goatee, but are there good twins with a goatee other than Flexo?

Re:I knew it! (1)

satellite17 (816105) | more than 2 years ago | (#39761677)

Eric Cartman?

Re:I knew it! (1)

RulerOf (975607) | more than 2 years ago | (#39761745)

Only one, usually the one with the beard.

But Golbez didn't have a beard!

Re:I knew it! (0)

Anonymous Coward | more than 2 years ago | (#39762689)

Golbez wasn't evil. He was being mind-controlled.

Re:I knew it! (0)

Anonymous Coward | more than 2 years ago | (#39764489)

But Zemus didn't have a beard!

Re:I knew it! (0)

Anonymous Coward | more than 2 years ago | (#39761303)

No-no, it's _one_ of twins is evil.

They grabbed both because they couldn't sort out which one is which - they are too young, so now the police have to wait a year or so until one of them springs a goatee.

Re:I knew it! (-1)

Anonymous Coward | more than 2 years ago | (#39761471)

which makes george w. bush the father of evil.......

Re:I knew it! (1)

gstrickler (920733) | more than 2 years ago | (#39762743)

In that instance, it appears only one is evil, not both. It's an "evil twin" scenario.

Re:I knew it! (2)

gstrickler (920733) | more than 2 years ago | (#39762507)

What about the Doublemint twins?

Re:I knew it! (0)

Anonymous Coward | more than 2 years ago | (#39763353)

But which is the evil one?
Came here to make this joke, missed by that much.

what about those companies (1)

fugas (619989) | more than 2 years ago | (#39761237)

Shouldn't the companies that paid them to get featured in their app be charged as well?

Re:what about those companies (0)

Anonymous Coward | more than 2 years ago | (#39761277)

When punishments are involved a company isn't considered a person.

Re:what about those companies (1)

bryan1945 (301828) | more than 2 years ago | (#39761327)

This is true in England, also? I really don't know how the laws work for companies over there compared to the US corporations.

Re:what about those companies (4, Funny)

PopeRatzo (965947) | more than 2 years ago | (#39761569)

This is true in England, also? I really don't know how the laws work for companies over there compared to the US corporations.

When it comes to corporations, US law is the only one that matters when it comes to protecting the company, but when it comes to tax law, Grand Cayman law is the only one that matters and when it comes to labor law, China is the only one that matters. They don't care about England.

Re:what about those companies (0)

Anonymous Coward | more than 2 years ago | (#39761619)

I would like to think that you are joking but it really sounds like you are genuinely stupid.

Re:what about those companies (1)

ScentCone (795499) | more than 2 years ago | (#39761743)

When punishments are involved a company isn't considered a person.

What is it exactly that you propose? If someone (or mulitple someones) in the company do something illegal, every employee of the company should be personally fined and/or sent to jail? Or maybe the exact nature of the transgression should be taken into account, with specific individuals prosecuted (which already happens), or with wide-spread-enough crimes causing direct regulatory take-over of the company (which already happens) after huge fines are paid (which already happens) and sometimes the dissolution of the company (which already happens) in combination with specific executives being criminally prosecuted.

But since your whining observation is without context, appears to be deliberately deceptive, and indicates that you like to maintain false memes so that you can Hate The Man, I can understand why you're an anonymous coward.

Re:what about those companies (1)

Opportunist (166417) | more than 2 years ago | (#39762673)

No. Fine the company, and if jail time is involved, forbid it to be public traded (or even forbid any kind of commercial activity) for the jail time period.

If the company then wants to go after the guy who is liable for it, they may do so themselves.

Re:what about those companies (0)

Anonymous Coward | more than 2 years ago | (#39764425)

Yeah I think it's stupid that corporations should be punished as a person (or be treated as persons). Just keep throwing the people involved into prison and the corporations will start behaving better. There's no need to punish the entire corporation or even fine it.

BUT corporations like Bank of America and Wells Fargo get away with massive money laundering (google for that - hundreds of billions worth over a number of years), because incompetent/crooked regulators say "too big to fail". And the bosses of MF Global get away with theft. So your "which already happens" doesn't seem to happen often enough.

Re:what about those companies (3, Interesting)

Anne Thwacks (531696) | more than 2 years ago | (#39765187)

UK law used to say that "Limited Liability" only applies so long as the company obeys the law. If the law is broken, individual directors are completely responsible. There is a concept of corporate liability, but, as I understand it, that is intended to handle civil liability, not criminal liability.

However, that does not appear to be how actual courts find according to the newspapers. I don't know if the law has changed, or if the courts have difficulties with reality.

My local government department claimed they would plead "corporate insanity" if prosecuted for being reckless, but I have it on good legal advice that corporate pleas of insanity are not recognised in the UK.

Disclaimer: If you sue me, I will lead insanity too.p

They have already been tried for their "crime" (4, Insightful)

Stu101 (1031686) | more than 2 years ago | (#39761253)

They have already been tried in the UK court and lost most of what the gained. It is a bid unfair in my mind.

Do you think it would be allowed, ie tried twice, once by the US government and then by the UK government if they where in the US. They would probabily get a job offer in the US.

I can't wait for the moment they get a similar issue with a Chinese coder........

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39761287)

They allegedly committed crimes in both countries, so why shouldn't they be prosecuted in both countries? In this case they've been convicted in one country, why should that provide immunity against prosecution in the other?

Double jeopardy is about preventing redoes when the government doesn't get what it wants.

Re:They have already been tried for their "crime" (4, Insightful)

JaredOfEuropa (526365) | more than 2 years ago | (#39761333)

Double jeopardy is about not being punished for the same crime twice. The real question is: should what they did be regarded as two separate crimes in two countries? I think one should think long and hard before answering this in the affirmative. Consider: you grab a movie from the Pirate bay, and seed parts of it to torrent peers in 15 other countries. Is it fair to be convicted in each country separately?

Re:They have already been tried for their "crime" (2)

LeperPuppet (1591409) | more than 2 years ago | (#39761533)

Consider: you grab a movie from the Pirate bay, and seed parts of it to torrent peers in 15 other countries. Is it fair to be convicted in each country separately?

Don't give the RIAA and MPAA execs ideas. Imagine receiving multiple copies of their standard legal shakedown letters, each threatening a copyright lawsuit in a different jurisdiction where you may have been infringing.

Re:They have already been tried for their "crime" (1)

lee1 (219161) | more than 2 years ago | (#39762167)

Double jeopardy is about not being punished for the same crime twice.

No, it's what it says: being put in jeopardy for the same (alleged) crime twice. It's why (in the US) you can appeal your conviction, but the government may not appeal your acquittal. (Supposedly. In practice, if there is sufficient public outcry to string you up, you will be tried again for a "different crime," such as violation of a hate-crime law.)

Re:They have already been tried for their "crime" (2)

swalve (1980968) | more than 2 years ago | (#39762287)

Actually, double jeopardy is about not being in jeopardy of being punished for the same offense twice. You can do one "thing" that violates more than one law and be charged and convicted of more than one crime.

When you are charged with a crime, at its most basic, it is like a class action lawsuit against you, filed on behalf of the people of the jurisdiction. Even though many crimes have an actual victim (the guy whose jaw you broke, for example), the nominal victim is the people of the jurisdiction. In the jaw breaking example, you might be put on criminal trial for it and convicted. That was for going around doing stuff that the people of the jurisdiction don't care for. But you can then be sued personally by the guy whose jaw you broke for any damages that he suffered.

Take the file sharing example and change it around to something a little easier to understand. You are a citizen of the US, and you build a giant transmitter in Kansas. You set it for 890am, and pump a million watts into it. It blasts across the hemisphere. Your signal violates the signal laws of multiple countries. That one act has broken the laws of many jurisdictions, with victims in each jurisdiction. Each government has the right, on behalf of the collective rights of the people it represents, to put you on trial for the violation of their laws. In many cases, the other jurisdictions could decide to not prosecute because whatever punishment you get from the US is good enough for them. But they don't have to.

Re:They have already been tried for their "crime" (1)

JaredOfEuropa (526365) | more than 2 years ago | (#39764289)

It probably works different in different countries. In most of Europe, double jeopardy (or "ne bis in idem") means you cannot be convicted or prosecuted for something that you have already been tried for. This goes only for criminal proceedings, but "already been tried" explicitly includes being tried for the crime in another country (I'm not sure if certain countries with iffy legal reputations are excluded here).

However, civil suits are excluded from this clause: in your transmitter example you can only be tried once for criminal charges, but all victims have the right to seek damages in a civil suit, individually or in class action suits. And being ordered to pay damages does not free you from criminal charges either. Incidentally I find it rather weird that (in the US at least) one can be sued for damages by a victim even after you've been cleared of charges in a criminal proceedings for the same case.

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39765779)

But in this case you have arguably committed a different crime in each country. It's not like, I dunno, you're Italian and you murdered a German in Hungary.

Re:They have already been tried for their "crime" (1)

halcyon1234 (834388) | more than 2 years ago | (#39763507)

Consider: you grab a movie from the Pirate bay, and seed parts of it to torrent peers in 15 other countries. Is it fair to be convicted in each country separately?

Is it fair not to be? Or at least, for these countries to co-ordiante at who gets first crack, or whose conviction will be "good enough" for all?

Otherwise, I declare a country called Buttfucksontia. My country's copyright laws are international. If you are accused and convicted of copyright infringement, your punishment is to be called a jerkface.

I hereby accuse the entire Internet of copyright infringement. GUILTY! You are all jerkfaces.

Now that you have paid your dues, enjoy your freedom, secure in the knowledge that no other country can convict you of your heinous (but atoned for) crimes.

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39761347)

If they were not in the US when they committed the crime then there is no way they should be prosecuted by the US/extradited. I'm sure, though, The Crown will bend over for the US... again.

Re:They have already been tried for their "crime" (3, Insightful)

Zemran (3101) | more than 2 years ago | (#39761625)

Wrong, the crime was committed in the UK. They were in the UK when they committed it therefore that is where it was committed. Just because your government is prone to logical fallacies does not mean that you all have to act stupid.

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39764545)

That is not how the law works in the US, the UK, or any other common law country. Why do Slashdot coders and basement dwellers think they're qualified to make definitive pronouncements on legal topics so often?

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39765169)

So if they left the UK while their website was automatically taking orders for the fraudulent software, and went to say, Sweden on vacation, is it now a Swedish crime, too, even though they left all their work at home? Well, they probably passed through Norway on the flight there. So now you have three countries. Or better yet, their flight likely was in international waters for part of the time, so clearly, they can't be tried by ANY court for that time. So those people just don't get their money back.

The transaction being made takes place across where the customer is, where your website is, and where your payment processing servers are. Fraudulent advertisement on a website takes place somewhere across where the customer is, where your website is, and where you are (since you had to put up the deceptive site). When crimes are happening via the internet, it's incredibly stupid and naive to think that "where the owner of the site is" is necessarily where the crime is taking place.

Re:They have already been tried for their "crime" (0)

Anonymous Coward | more than 2 years ago | (#39765209)

Also, if you happen to counterargue that the act of putting it on the website selling the thing is the site of the crime, then I merely have to upload the site from international waters, come back to the UK, and reap the benefits of the fraud, without a crime having been committed.

Re:They have already been tried for their "crime" (1)

TFAFalcon (1839122) | more than 2 years ago | (#39761763)

As long as the crimes are truly separate then I don't see a problem with them being tried twice. Let's say that they were charged with defrauding X people in the UK, and they will be charged with defrauding Y people in the US. As long as those two sets don't have common members then prosecute away.

Re:They have already been tried for their "crime" (1)

tomhath (637240) | more than 2 years ago | (#39761525)

They have already been tried in the UK court and lost most of what the gained.

They were only fined about 1/3 of their total profit, they're still about $2million ahead. And they should face criminal charges in every country where they committed a crime.

Re:They have already been tried for their "crime" (1)

hot soldering iron (800102) | more than 2 years ago | (#39761817)

Actually, US military personnel have always been subject to double-, or even triple- jeopardy. They can be punished by military law and regulation, U.S. federal law, and if it happened in a foreign country involving native peoples, their laws also.

The government loves sending troops "over there", where ever "there" is this week, but the troops *really* don't want to go once they find out that they are in as much danger from bureaucrats as they are bullets. Not trusting others comes easy, but when you can't even trust your own people...

Re:They have already been tried for their "crime" (1)

El Torico (732160) | more than 2 years ago | (#39762667)

I can't wait for the moment they get a similar issue with a Chinese coder........

If it happens in China and Chinese lose money, he's dead. If foreigners lose money, he continues to work (defraud).
These punks were just too crude and didn't have the right connections and paperwork to cover their asses. Take a look at reverse mergers; they nearly all lose money for the retail suckers, err, I mean investors. That's when crooked Chinese businesses (yes, that's a very redundant term) collude with crooked American stock underwriters (again, a redundant term) to sell stock based on fraudulent financial data.

Re:They have already been tried for their "crime" (1)

mrmeval (662166) | more than 2 years ago | (#39763405)

Actually the black robed priests of our illustrious and fault free US supCt have ruled that you can be tried twice for the same crime if it is prosecuted in two different jurisdictions. You can be busted for pot in Maryland, convicted in state court, then convicted in Federal court and serve both sentences serially. If there is a weasels hair of an innocent sounding line in a treaty or binding agreement or someone thinks there is then you can be extradited and disappear.

Also you can get convicted, have a hefty fine, wow actually ALL of the money you have is the fine then the civil suit comes and well all those pesky dweebs who you bilked out of money can't get anything out of you because the government has it. Sweet isn't it.

Crooks always work for the state. They cause people to want more law enforcement, judges, clerks, jails, laws, penalties, fines....it just means they have to raise taxes, increase regulation and stiffen enforcement a little for your own good. Every day. Day after day. The web of the world wide laws is getting tangled don't get strangled.

Good one. (4, Insightful)

mrjb (547783) | more than 2 years ago | (#39761271)

£745,000. 75000 people. Fraud or not, they've scammed these people for on average just under £9.95 a person. Don't know about you, but if I found out I'd been scammed by two teenagers to the tune of a tenner for being greedy and gullible, I'd consider that a very cheap lesson and I might even have a laugh over it. Well done, Hunter twins, for making a million dollars out of greedy people. And another lesson learned: If you've got money, people get envious.

Now what I always find interesting is when the numbers don't work. According to TFA, "investors paid $47 for newsletters listing Marl's stock picks and $97 for a home version of the software". Yet on average, the investors are down just a tenner? I don't mean to nitpick, but to me that sounds like the bloody thing actually worked. Oh, wait, it was unregulated software. What would you expect from two 16-year-olds?

I'm a bit worried about the precedent this is setting though. If I choose to buy a newspaper with a horoscope in there, or if I buy horoscope software and the predictions don't come true, should I sue?

Re:Good one. (3, Funny)

jaymemaurice (2024752) | more than 2 years ago | (#39761313)

Your mathematics and/or facts are not welcome at this trial. BURRN THE WITCH!

Re:Good one. (2)

jaymemaurice (2024752) | more than 2 years ago | (#39761349)

Some participants can and will make money in a pump and dump scam... success does not make it ethical... but ethics in the stock market where everyone is trying to make money simply because they have/have someone elses money? Seriously?!

Re:Good one. (2)

bryan1945 (301828) | more than 2 years ago | (#39761345)

That's the difference between the stock market and fortune tellers/horoscopes- the 1st one you're legally expected to tell the truth, the 2nd one you're expected to... um, say nice things? If the fortune teller has soft hands then maybe nicer things?

Re:Good one. (1)

Hentes (2461350) | more than 2 years ago | (#39761381)

If enough people used the software then their numbers alone could start a small bubble on whatever stock the kids picked. As they were in for quick gain most of them left before the prices have returned to normal. So they could gain something, at the expense of other people on the market.

I'm a bit worried about the precedent this is setting though. If I choose to buy a newspaper with a horoscope in there, or if I buy horoscope software and the predictions don't come true, should I sue?

In some places, you might [telegraph.co.uk] .

Re:Good one. (1)

91degrees (207121) | more than 2 years ago | (#39761447)

Still, I think this is behaviour I'd rather discourage.

Even if the victims deserved to lose, these guys didn't deserve to gain anything, and so while I probably wouldn't let this worry me too much if I was a victim, I can't say it worries me too much that they *are* going to be punished either.

Re:Good one. (1)

genik76 (1193359) | more than 2 years ago | (#39761455)

I don't think there's a moral difference between scamming 10 pounds (or whatever unit of currency) from 75000 people and scamming one person 750000 pound. The damage is the same, just distributed differently.

Re:Good one. (3, Insightful)

Anonymous Coward | more than 2 years ago | (#39761633)

I do think there's a difference. Stealing £10 from 75,000 people causes 75,000 people skip the cinema this week. Maybe not even that. Stealing £750,000 from one person might cost that person his or her home and retirement. A person harmed in this way might not ever be able to recover. People have thrown themselves in front of trains for less. I suspect fewer have done so over 10 quid. There's a "lives destroyed" weight multiplier that must be factored in. Sort of ((number of people) x (amount lost average) x (number who can't recover)). Not exactly, of course. Many missing factors. If only it were that simple!

But regardless, still a crime either way.

Re:Good one. (0)

genik76 (1193359) | more than 2 years ago | (#39764001)

I think that's more an emotional factor. Like most people care more about a child murdered in the neighbourhood than thousands of children starving in some far-away land. If you combine the suffering of all those people deprived of their £10, the suffering may amount to the same level as depriving one person of £750000. Of course there's no way to know.

Re:Good one. (0)

Anonymous Coward | more than 2 years ago | (#39762249)

You are basing morality on damages? Wrong is wrong, I admit. But even if 10000 of those people learned not to fall for this crap in the future, that is still an amazing deal at £75!

Remember, we spend tens of thousands of dollars on college just to learn this type of lessons so that they don't cost us your second situation.

On Morality, I will yield to a well know law:
It is morally wrong to allow suckers keep their money.

Re:Good one. (1)

Tom (822) | more than 2 years ago | (#39761565)

I'm a bit worried about the precedent this is setting though. If I choose to buy a newspaper with a horoscope in there, or if I buy horoscope software and the predictions don't come true, should I sue?

I'd join. If just for the entertainment value of finding out what they come up with in their defense.

Re:Good one. (0)

Anonymous Coward | more than 2 years ago | (#39761687)

That's what they paid for the advice - the amount the twins scammed *directly*. The investors would then have gone on to sink larger sums into the pumped stock. 745k is the tip of the iceberg.

Re:Good one. (0)

Anonymous Coward | more than 2 years ago | (#39765935)

The home version of the software, which the twins claimed used an algorithm developed at GS and "became smarter" the longer it was installed, was actually just picking up a stream of stock picks from a server. Said stock picks were not chosen independently but sponsored by the companies involved. It's a pump-and-dump penny stock scam; quite common, and certainly illegal, whether you use a newsletter or a software agent.

perfect (1, Interesting)

roman_mir (125474) | more than 2 years ago | (#39761275)

they should be hired to run the government programs, such as health insurance, social security, etc. In fact Strategic Hazard Intervention Economics Logistics Directorate agency could be created with all of these guys, including Bernie Madoff as the program's director.

SEC (4, Insightful)

roman_mir (125474) | more than 2 years ago | (#39761307)

So somebody gives a shit about 2, 2 bit crooks in UK. Good for them.

How about SEC not doing their job [slashdot.org] even though they've been notified multiple times about a pump and dump operation that is ran by the very definition of a pumper and dumper?

Oh, I forgot, that's the same SEC that was notified about Madoff years before his pyramid blew up. Same SEC that was absolutely useless during the Internet and the housing bubbles and now during this bond and dollar bubble. Well, I suppose later they'll come out and say: nobody could have seen it coming.

Re:SEC (3, Insightful)

bryan1945 (301828) | more than 2 years ago | (#39761351)

SEC only goes after someone when one of their own gets shafted. Us little pissants are not worthy of their attention.

Re:SEC (2)

swb (14022) | more than 2 years ago | (#39762265)

I'd go one further, the SEC only goes after parties its sure it can defeat. I'm sure there are other criteria, too, such as policies which state that SEC enforcement actions cannot have a "deleterious effect on market conditions" which means that they will only go after large players in limited ways, since something like nailing Goldman Sachs to the wall may hurt overall market activity.

Re:SEC (0)

Anonymous Coward | more than 2 years ago | (#39761369)

credit card bubble before dollar bubble :) The US will wage wars to keep the dollar strong, and feed off the atrophied citizenry at home in order to lend credibility to its GDP.

Re:SEC (1)

roman_mir (125474) | more than 2 years ago | (#39761395)

The US will wage wars to keep the dollar strong,

- what the hell does this mean? The government's and the Fed's policy is destruction of the currency unless you didn't notice, so if a war has to start to keep it strong, then it has to be a war against the government and the Fed.

Re:SEC (1)

TheRealMindChild (743925) | more than 2 years ago | (#39763641)

Dollar bubble? The dollar is worth less to comparible countries than it has been since I've been alive.

Re:SEC (1)

roman_mir (125474) | more than 2 years ago | (#39763715)

That's right, it's a dollar bubble. Every bond that is bought is another dollar.

Re:SEC (1)

Alex Belits (437) | more than 2 years ago | (#39763901)

Dollar bubble? The dollar is worth less to comparible countries than it has been since I've been alive.

And it's still far above its true value. US dollar is backed by by "those crooks can't print dollars much faster than the whole world makes products, can they?"

That's unfair (4, Insightful)

obarthelemy (160321) | more than 2 years ago | (#39761393)

There was a chinese wall ! One twin was handling commission for firms, the other one recommendations to clients.

Oh wait, that's only good if you're Goldman Sachs.

Re:That's unfair (0)

Anonymous Coward | more than 2 years ago | (#39761885)

that's only good if ...

The true point of a Chinese wall is to convert tax-deductible expenses on one side of the wall into revenue on the other side of the wall. Result: free money (after tax). Ker-ching!

Example: Business X pays $Y to person A, an expense for business X. Person A then pays $(Y/3) to his lawyer, which is revenue for business X!

No such thing happened (0)

Anonymous Coward | more than 2 years ago | (#39761409)

"defrauding investors" requires there to be investors present. A more accurate description would be "defrauding speculators". Knowledgeable investors are rare when so many of us enter the stock market with no understanding of the specific details of what we are 'investing' in. We jump into 401Ks because we get taxed more otherwise, and interest rates are held low so that actual saving is impossible. We are speculators, which is why such fraud is even remotely possible.

This doesn't sit right with me. (1)

Chrisq (894406) | more than 2 years ago | (#39761435)

They have already faced criminal charges in the UK, so they cannot face them again in the USA. What the U.S. Securities and Exchange Commission has done is bring a civil case against them. Now I am not sure why this feels wrong to me, because I would be very happy for the UK investors who lost out to bring a civil case against them, but having a government agency do it to someone who has already faced criminal charges just feels wrong.

Re:This doesn't sit right with me. (2)

Antique Geekmeister (740220) | more than 2 years ago | (#39761519)

As long as the charges are for a distinct offense, double jeopardy does not apply. Review the definition of double jeopardy carefully. And double jeopardy hardly applies to US courts for UK convictions.

Re:This doesn't sit right with me. (0)

Anonymous Coward | more than 2 years ago | (#39761603)

Are you SURE it doesn't apply to US courts for UK convictions?

If one quarter of their "victims", say, were in the US, and three quarters in the UK, could you try them both times? Would both times be for ALL the victims, or just those in the respective countries?

What if they had one victim in every country of the world? Would they have to spend the rest of their lives in court cases all around the world, hoping to be found innocent over a hundred times?

What if I accused YOU of the same crime? Would you like that world tour?

Re:This doesn't sit right with me. (0)

Anonymous Coward | more than 2 years ago | (#39761643)

It wouldn't matter because I'm not swindling people out of their money

Re:This doesn't sit right with me. (0)

Anonymous Coward | more than 2 years ago | (#39761673)

Prove it, in court, in 100 different countries.

Re:This doesn't sit right with me. (1)

Chrisq (894406) | more than 2 years ago | (#39761705)

Are you SURE it doesn't apply to US courts for UK convictions?

IANAL and I am not 100% sure, but my understanding is that in a UK criminal court (and most others) if you are convicted you can ask for other cases to be taken into consideration, which means that the sentence included these. My understanding from extradition cases where people ask to be charged in the UK to avoid being extradited somewhere else is that if you are convicted and punished in one country for an offence you can not be extradited and charged criminally for the same offence somewhere else

So I am reasonably certain that (providing all cases where taken into account) having been convicted in a UK court they could not be charged for the criminal case for a second time in the US court.

unregulated (4, Interesting)

Tom (822) | more than 2 years ago | (#39761549)

Their main legal mistake was that they were providing unregulated financial advise.

Other than that, their business wasn't all that different from most of the others. Pretty much everyone in the financial market, big bank or small trading company, is bordering on outright fraud. Yes, I have bit of insider knowledge, from long before the crash. This has been going on for quite a while.

Well no duh. (0)

Anonymous Coward | more than 2 years ago | (#39761577)

Figured this out a long time ago.

Although not exactly as described in the article, I figured it out to not be real simply because it didn't have access to a real-time data source. It's kinda like saying, here's a program that gives you free satellite TV, yet doesn't require a satellite dish.

So the question was, either the stock picking robot was being fed data for pump and dump scams or it was malware and actually waiting for brokerage software to run to get the passwords.

Surely 1.2 millidollars is barely petty theft (1)

Chris.Nelson (943214) | more than 2 years ago | (#39762161)

How is that worth international intrigue?

Brilliant (2)

Murdoch5 (1563847) | more than 2 years ago | (#39762557)

This is awesome, at least the project is. Did these brothers really defraud anyone? Think about it, they offered stock advice which caused a change in the stock market, stock brokers do the same thing and there no more accurate. If your going to charge these twins then you need to charge every single broker who has ever lost money by making bad stock picks because in a sense this program did nothing different.

Re:Brilliant (0)

Anonymous Coward | more than 2 years ago | (#39762711)

What did they do wrong? They thought they could do the same thing rich, well connected members of the right "tribe" can. Of course, they can't.

Re:Brilliant (0)

Anonymous Coward | more than 2 years ago | (#39763039)

It is perfectly legal if you got a license to steal (aka pass Series 7 or whatever needed to become a stock broker). They didn't.
if the would be working for GS they would have gotten a bonus instead.
 

Re:Brilliant (1)

Anonymous Coward | more than 2 years ago | (#39763393)

It's like running the state lottery vs. an illegal numbers game. They're both gambling, and I wouldn't be totally surprised if the illegal one is run more honestly. One is legal because the state gets their cut.

How about the other frauds? (1)

Smallpond (221300) | more than 2 years ago | (#39763793)

Here's a few:

  • Give us your personal information and you can have lots of friends.
  • Our motto is "Don't be evil"
  • The government is actually more efficient than the private sector

Stock Picking Robot (0)

Anonymous Coward | more than 2 years ago | (#39767413)

I was interested until I realised it was about shares and not this...

http://www.youtube.com/watch?v=UQt2YOYF8Uo

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