32 people charged in international hacking and insider trading ring

The Securities and Exchange Commission (SEC) of the United States announced on August 11 fraud charges against 32 people, among them two are Ukrainian men, after finding their involvement in an alleged international hacking and insider trading ring.

The SEC issued a press release informing that these people took part in a scheme to profit from stolen nonpublic information about corporate earnings announcements.

“Those charged include two Ukrainian men who allegedly hacked into newswire services to obtain the information and 30 other defendants in and outside the U.S. who allegedly traded on it, generating more than $100 million in illegal profits,” the press release read.

According to the press statement, the complaint against the people was filed under seal on August 10 in U.S. District Court in Newark, N.J.

The crooks used proxy servers to mask their identities and by posing as newswire service employees and customers.  The two allegedly recruited traders with a video showcasing their ability to steal the earnings information before its public release.

“The complaint charges that in return for the information, the traders sometimes paid the hackers a share of their profits, even going so far as to give the hackers access to their brokerage accounts to monitor the trading and ensure that they received the appropriate percentage of the profits,” the statement read.

Similarly, it also charges that the traders sought to conceal their illicit activity by establishing multiple accounts in a variety of names, funneling money to the hackers as supposed payments for construction and building equipment, and trading in products such as contracts for difference (CFDs).                                              

“This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and profits generated,” Mary Jo White, Chairperson of the SEC, said in the press release.

 “These hackers and traders are charged with reaping more than $100 million in illicit profits by stealing nonpublic information and trading based on that information. That deception ends today as we have exposed their fraudulent scheme and frozen their assets,” she added.

The SEC charged that Ivan Turchynov and Oleksandr Ieremenko created a secret web-based location to transmit the stolen data to traders in Russia, Ukraine, Malta, Cyprus, France, and three U.S. states, Georgia, New York, and Pennsylvania.

“This cyber hacking scheme is one of the most intricate and sophisticated trading rings that we have ever seen, spanning the globe and involving dozens of individuals and entities,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “Our use of innovative analytical tools to find suspicious trading patterns and expose misconduct demonstrates that no trading scheme is beyond our ability to unwind.”

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