Overseas Data Hackers Behind Insider Trading Case

Insider TradingIn August, the U.S. Department of Justice in Brooklyn, N.Y. and Newark, N.J. charged nine people in federal court with insider trading in an operation where hackers broke into three business newswire organization servers, stole yet-to-be-published press releases, and used that information to make trades that generated $30 million in illegal profits. In addition to the DOJ charges, the SEC also filed a civil complaint against the nine, along with eight other individuals and 15 companies in the U.S. and abroad.

The information thefts were widespread. The defendants hacked into newswires and stole 150,000 confidential press releases from Marketwired, Business Wire, and PR Newswire. Of those releases, over 800 were used for information to make trades ahead of the news being made public.

According to the DOJ this case is the largest of its kind ever prosecuted.

“The defendants launched a series of sophisticated and relentless cyberattacks against three major newswire companies, stole highly confidential information, and used it to enrich themselves at the expense of public companies and their shareholders, said Paul J. Fishman, U.S. Attorney for the New Jersey District.

According to the indictments, the charged traders created “wish lists” for the hackers, who were in the Ukraine, identifying press releases they considered to be of value. Then trades were made based on information in the yet-to-be-made public releases.

Of the nine defendants listed, four were from Ukraine, and the others from the U.S., but also of Eastern European origin. Two of the men were described as Ukrainian computer hackers, and six were stock traders. Penalties for the alleged crimes include a maximum 20-year jail sentence and $250,000 fine, or twice the gain or loss from the offense.

Twenty years in prison is not something to trifle with. Let RegTec educate your staff on the proper way to trade and how not to get caught up in the attraction of insider trading.

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