Hacking ring made $100 mn on stolen news releases between 2010 and 2015

13 Aug 2015

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An alliance of mostly US-based stock traders and computer hackers in Ukraine made $100 million over five years, stealing confidential corporate press releases, US authorities said yesterday.

The charges were announced by prosecutors against nine people in an insider-trading case that comes as the first time criminal charges had been brought for a securities fraud scheme that involved hacked inside information from 150,000 press releases distributed through Business Wire, Marketwired and PR Newswire.

"This is the story of a traditional securities fraud scheme with a twist - one that employed a contemporary approach to a conventional crime," FBI assistant director-in-charge Diego Rodriguez said at a news conference.

According to prosecutors, Ukraine-based hackers improperly accessed press releases before the distributors planned to release them to the public. The hackers received from the traders "shopping lists" of releases, prosecutors said.

To help traders view the stolen releases, the hackers create a "video tutorial", and received  part of the profits from trades on the basis of the information in them, prosecutors said.

Grand juries in Brooklyn, New York and Newark indicted nine people on charges that they made $30 million in illegal profits starting around February 2010.

In one instance in late October 2013, Panera Bread Co, the national chain of restaurants specialising in healthy soups and baked goods, prepared a news release to announce it was adjusting its earnings expectations downward for the recently begun fourth quarter.

The release was one of the many by publicly-traded companies to business news services for publication.

There was something extraordinary with this one though. According to federal authorities as the unsuspecting investing public awaited the announcement, the group had seen the release in the computer system of Marketwired, the Toronto business newswire.

Using the crucial information in the release the group allegedly made $17 million worth of trades and orders betting Panera's stock would lose value once the news went public.

They were right and for their efforts made around $1 million in profit, according to a criminal indictment unsealed Tuesday against nine people in the US and Ukraine.

Security company Kaspersky Lab has said that hackers have stolen over $1.2 billion from several banks and financial institutions in the past two years (See: Hackers stole over $1.2 bn from banks and financial institutions: Kaspersky Lab).

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