A new case that is being led by the FBI and prosecutors from the US Attorney’s office in Brooklyn, New York, reveals that cybercrime is now being employed to make vast amounts of money insider trading. Whereas, in the past, someone had to be persuaded to it give up, now hackers can simply get into systems to steal the valuable corporate information.
Following arrests this morning, it is now known that a team of stock market traders from the US have been accused of stealing press releases with the help of a team of hackers based in Ukraine. The hacked press releases are believed to have contained valuable corporate information that allowed the accused to make trades before the news went public.
In total, nine suspected traders will face charges in court, and although so far there have been two separate federal indictments, it is expected that the accused will also have civil charges brought against them.
Although not much information on the cases has surfaced so far, it is known that the three press release distributors involved were Marketwired, PR Newswire and Business Wire (which belongs to Warren Buffett‘s Berkshire Hathaway.)
Those are three of the biggest distributors of their kind, and are widely used, and trusted, by corporations all over the US to release news that could affect stock prices. That includes earnings announcements, news about mergers and acquisitions, as well as other information relating to corporations that could change their stock market value.
It is believed that around 100,000 press releases were stolen in the hacks, which prosecutors now firmly believe originated in Ukraine, and which were subsequently passed on to associates in the US. The group of rogue traders, which were effectively guilty of insider trading, are accused of making a whopping $30 million in the three years between 2010 and 2013.
It is thought that dozens of companies were involved in this case of cyber espionage, but so far only a few have been named including Panera Bread, Boeing, Hewlett-Packard, Caterpillar and Oracle Corp.
So far five people have been arrested following raids in Georgia and Pennsylvania, with four more still at large. All are wanted on charges of hacking and fraudulently executing ‘approximately 1,000 inside the window trades’ using retail brokerage accounts.