A group of U.S. of equity traders and hackers in Ukraine earned $100 million in profits over five years after getting insider information from undispatched corporate press releases and using those to guide them.
The Associated Press reported that it was the biggest scheme of its kind to be prosecuted by federal authorities and showed the financial world's vulnerability. Reuters, meanwhile, reported it will be the first time prosecutors will go after perpetuators of securities fraud using hacked insider information.
The AP said nine people in the U.S. and Ukraine were charged for a variety of federal offenses, while the U.S. Securities and Exchange Commission also filed civil suits against 23 people in companies in the States and Europe. Reuters said five were arrested on Tuesday, while international arrest warrants have been issued against the remaining four.
The reports said the hackers were able to gain access to more than 150,000 press releases until May 2015 from a variety of companies before those were dispatched by distributors Marketwired of Toronto; PR Newswire in New York; and Business Wire of San Francisco.
The traders provided a list of press releases they would like to see, and used the information such as earnings data and other corporate information in making bets on the market. The AP added that the advanced information from 800 of those press releases provided the traders with an advantage as share prices usually move on positive or negative corporate disclosures. The hackers were given a cut of the profits by the traders.
Citing U.S. authorities, the reports added that the incident shows that companies need to strengthen cyber security measures with criminals expanding into other forms cybercrimes.
AP said the incident also shows vulnerability of companies who provide sensitive information to third-party suppliers.
Reuters said the breach may also put pressure on the business of press release dispatch providers as companies opt to release the sensitive information on their own. The report, however, noted that all the companies that were hacked said they cooperated with authorities and have security measures in place.
