Quick overview
- Online hackers have executed scams in Japan’s stock market, resulting in fraudulent trades totaling around 100 billion yen since February.
- Eight major brokerage firms have reported unauthorized transactions, prompting the government to encourage discussions on client compensation.
- Fraudulent trading incidents surged dramatically in April, highlighting a significant increase in cybercrime targeting brokerage accounts.
- Cybercriminals utilize tactics like man-in-the-middle attacks and information-stealing malware to access sensitive user data and brokerage accounts.
Online hackers are unleashing a wave of scams within Japan’s stock market. Since February, fraudulent trades have reached a staggering 100 billion yen (around $710 million), with no signs of slowing down.
Typically, the hacked accounts are used to purchase low-priced stocks, both domestically and internationally.
Eight of Japan’s leading brokerage firms, including Rakuten Securities Inc. and SBI Securities Co., have reported unauthorized transactions on their platforms. In response, Japan’s government has urged brokers to engage in “good faith” discussions with affected clients regarding compensation for their losses, Finance Minister Katsunobu Kato said on April 22.
The Japan Securities Dealers Association, the country’s primary industry group for securities firms, is also pressing its members to update their systems and require mandatory multi-factor authentication. Association President Toshio Morita criticized the slow pace of compensation efforts but acknowledged that each firm must set its own policy regarding client reimbursements.
Fraudulent trading incidents surged to 736 cases in the first half of April, compared to just 33 in February, according to Japan’s Financial Services Agency, although the agency did not disclose the total losses suffered by victims. The growing threat poses a risk to the government’s broader strategy to encourage greater investment among citizens.
How the Scams Are Carried Out
The cybercriminals behind these scams likely employ tactics such as “man-in-the-middle” attacks and information-stealing malware to gain access to brokerage accounts.
In man-in-the-middle attacks, hackers exploit both fake and legitimate websites to steal cookies—small text files stored in browsers containing session data.
Typically, users are lured to a fake site through phishing emails or malicious ads. The fake site then redirects them to a real brokerage platform, intercepting their login credentials in the process.
In some sophisticated cases, hackers create elaborate interfaces, where one part of the browser displays the genuine site and another the fraudulent one, deceiving users more effectively.
On the other hand, information stealers are a type of malware specifically designed to extract sensitive information, such as user IDs and passwords. Hidden inside phishing emails, malicious ads, or fake websites, these programs can silently infiltrate a user’s device and steal personal data without the user’s knowledge.
At least 105,000 credential leaks have been recorded in Japan, according to a study by Macnica Security Research Center.
One particular vulnerability in Japan is the public’s preference for accessing brokerage platforms via web browsers rather than more secure mobile apps.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
