On August 11, 2015, federal prosecutors in the District of New Jersey and the Eastern District of New York unsealed indictments against nine individuals in the United States and Ukraine who were allegedly involved in a five-year, widespread hacking and trading scheme.1 On the same day, the Securities and Exchange Commission filed a complaint in federal district court in New Jersey making similar allegations. The defendants allegedly hacked into major news wires that distribute press releases, stole advance, not yet public copies of financial press releases, and traded on the basis of the information, reaping over $100 million in unlawful profits.

I. An Unprecedented Hacking and Trading Scheme -

According to the indictments and parallel SEC civil complaint, the scheme involved two key groups of defendants. The first group is alleged to be comprised of sophisticated hackers who broke into the networks belonging to PR Newswire, Business Wire, and Marketwired through a variety of improper means, including brute force, SQL injection, and phishing attacks, and stole advance, nonpublic copies of financial press releases. Hundreds of publicly traded companies use these three media services to disseminate news to the market place, including earnings reports and other financial information. As standard practice, publicly traded companies may send current versions of their financial press releases to the media services several minutes to several days before publication.