According to a press release issued by the U.S. Attorney’s Office for the District of New Jersey, the U.S. Department of Justice (“DOJ”) unsealed two indictments on August 11, 2015 that bring charges against a network of hackers, traders, and companies that have allegedly engaged in a conspiracy to hack yet-to-be made public press releases from newswires. The U.S. Securities and Exchange Commission (“SEC”) brought a related civil action against a wider set of individuals and entities as well. Together, the new filings allege that over the past five years, the conspirators stole over 150,000 press releases and traded ahead of their public release to generate as much as $100 million dollars in ill-gotten gains.
In the DOJ indictments, 9 individuals were charged, four of whom were Atlanta area residents. The SEC’s civil action names 17 people and 15 corporate entities. According to the filings, hackers based in the Ukraine compromised the computer networks of Marketwired, PR Newswire Association, and Business Wire and transmitted the information to U.S.-based traders. The traders then capitalized on the information in a flurry of trading activity before the news releases were made public shortly after the close of the markets and shared the profits through a series of shell companies.
Paul J. Fishman, the U.S. Attorney for the District of New Jersey, categorized the defendants as a “well-organized group that allegedly robbed the newswire companies and their clients and cheated the securities markets and the investing public by engaging in an unprecedented hacking and trading scheme.” According to U.S. Attorney Fishman, “[t]he defendants launched a series of sophisticated and relentless cyber attacks against three major newswire companies, stole highly confidential information and used [it] to enrich themselves at the expense of public companies and their shareholders.”
According the Department of Justice, the sophisticated scheme is the largest hacking and securities fraud scheme that has ever been prosecuted.
Reporter, Andrew M. W. Mutter, Atlanta, +1 404 572 4705, amutter@kslaw.com.
