Twins Alexander and Thomas Hunter were just 16 years old when they devised the "elaborate" online scam that fooled around 75,000 people, US officials say.
In 2007 the brothers allegedly invented a fictitious "stock picking robot" and claimed on a series of websites that the highly sophisticated computer trading programme could identify stocks that were poised to rocket in value.
They then targeted thousands of unsuspecting investors, mainly in the US, selling them "home versions" of the bogus software - named Marl - and an annual subscription to a newsletter that listed the programme's stock recommendations.
However, the stocks were not generated by any technical analysis and in fact the brothers were paid by companies to promote their shares, according to the United States Securities and Exchange Commission (SEC), which has brought the civil action.
Legal papers filed in a New York federal court claimed investors paid $47 newsletters listing Marl's stock picks and $97 for the home software.
The twins promoted the scam on websites doublingstocks.com, which claimed the robot's stock analysis earned returns of 34% per week, and daytradingrobot.com, it is said.
Meanwhile, the Hunters, now 20, received at least an additional $1.86 million (£1.15m) in fees from stock promoters for their stock touting services, which was advertised on website equitypromoter.com.
The site boasted of the brother's ability to "rocket" the price and volume of thinly traded penny stock issuers.
Writing on their website, Tom Hunter described himself as a 23-year-old stock trader.
"I have been trading for 7 years and operate multiple penny stock websites," he is alleged to have said.
"These websites are extremely popular attracting many thousands of visitors each day. Hundreds of these visitors provide me with their email address with the desire to receive my weekly stock recommendations.
"One email to this list of people rockets a stock price."
Once a stock promoter was reeled in by the scam, the twins would then send an email to the thousands of investors subscribed to their newsletter, recommending they buy the touted asset.
And once investors followed the bogus advise the shares value and volume would instantly increase.
US officials claim the brothers, reportedly from Whitley Bay, North Tyneside, breached both the Securities Act and Securities Exchange Act.
The SEC is seeking permanent injunctions against the pair to prevent them from continuing to engage in securities fraud and an order requiring them to hand over their ill-gotten gains, which were allegedly collected in UK and offshore bank accounts.
In November, Newcastle Crown Court ordered Alexander Hunter to pay back nearly 1m US dollars after he admitted providing unregulated financial advice, according to the BBC.
He was given a suspended 12-month prison sentence.
SOURCE: PA
