On the Feasibility of Automating Stock Market Manipulation

Abstract

This work presents the first findings on the feasibility of using botnets to automate stock market manipulation. Our analysis incorporates data gathered from SEC case files, security surveys of online brokerages, and dark web marketplace data. We address several technical challenges, including how to adapt existing techniques for automation, the cost of hijacking brokerage accounts, avoiding detection, and more. We consolidate our findings into a working proof-of-concept, man-in-the-browser malware, Bot2Stock, capable of controlling victim email and brokerage accounts to commit fraud. We evaluate our bots and protocol using agent-based market simulations, where we find that a 1.5% ratio of bots to benign traders yields a 2.8% return on investment (ROI) per attack. Given the short duration of each attack (< 1 minute), achieving this ratio is trivial, requiring only 4 bots to target stocks like IBM. 1,000 bots, cumulatively gathered over 1 year, can turn $100,000 into $1,022,000, placing Bot2Stock on par with existing botnet scams.