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Some security policies relaxed on airlines | (KRT) The Securities and Exchange Commission charged a 19-year-old computer hacker with securities fraud Thursday for allegedly breaking into a brokerage account and making unauthorized trades. This is the first securities fraud case the SEC will prosecute that includes computer hacking and identity theft allegations.

"I've not seen a case like this before," said John Reed Stark, the SEC's Internet enforcement chief.

Van Dinh, of Phoenixville, Pa., owned a large number of options to buy shares of Cisco Systems at a price far above the current price, making them worthless, according to the SEC. Options generally only have value when they give the holder the chance to buy a stock at a price lower than its current price.

The agency says Dinh hacked another trader's account to place a buy order for those options, so that he could then sell them - meaning he got the money and the other person was stuck with the worthless options.

According to the charges, Dinh disguised a keystroke-logging program as a new stock-charting tool to remotely monitor computer activity of users who downloaded it.

He used the program to obtain the login and password of the victim's TD Waterhouse brokerage account and placed unauthorized orders for 7,200 Cisco option contracts, according to the SEC.

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"I've never seen anyone use a keystroke-logging program in terms of securities fraud. This is a very sophisticated fraud scheme," Stark said.

Dinh tried to cover his tracks by using foreign Internet service providers, online aliases, multiple e-mail accounts and Web sites to conceal his identity, the SEC said.

The SEC issued up to 30 subpoenas to trace the illegal activity allegedly committed by Dinh, who avoided $37,000 in losses by implementing the scheme. The agency wants him to return the illegal proceeds with interest and pay civil monetary penalties.

Separately, the U.S. attorney in Massachusetts filed criminal charges against Dinh for securities fraud, mail and wire fraud and causing damage in connection with unauthorized access to a protected computer.

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