Security breach reported by Internet trading site collective2.com

By Davis D. Janowski

Dec 30, 2009 @ 5:12 pm (Updated 5:13 pm) EST

Users of the do-it-yourself trading site collective2.com received an “urgent” e-mail at a few minutes past noon Wednesday notifying them that the company's computer database had been breached by a hacker and that all users should log in to change their passwords immediately.

That e-mail, from Collective2 LLC founder Matthew Klein, stated that the information accessed by the hacker included names, e-mail addresses, passwords and credit card information.

In addition, the e-mail went on to state: “We have contacted federal and state law enforcement authorities, who we hope will track down and prosecute the person responsible. More important: we have changed our database security, locked down our servers and altered our website in order to prevent similar attacks. We are also notifying the three credit bureaus — Equifax, Experian and TransUnion — of the breach.”

An e-mail to Mr. Klein and phone calls to a company spokesman had not been returned by time of publication.

Launched in 2003, collective2.com provides its 25,000 subscribers with algorithm-based, computer-generated trading systems. A trading system is a set of formulas and rules that generate buy and sell recommendations based on price, volume or other data.

Collective2.com acts as an online repository for more than 9,000 automated trading systems developed by mathematicians and traders from around the world.

Once an investor selects his systems, trades are automatically placed in the customer's regular brokerage account; the customer alone selects which trading strategies are automated in his account and can see, in real time, exactly which trades are being placed.

Trading volume at the site rose to $17.5 billion during the third quarter. That compares with about $1.2 billion in the similar period a year ago.

There are several sites similar to collective2, including covestor.com and marketocracy.com, which are based on stock trading only, and zulutrade.com, which is involved in currency trading.