U.S. authorities shut down a suspected insider-trading ring, which cybercriminals fueled with sensitive information stolen from corporate press releases before they became public, Bloomberg reported yesterday (Aug. 11).
The alleged computer hackers, who are believed to be in Ukraine, are being accused of accessing the computer servers of major press release websites PRNewswire, Marketwired and Business Wire, a unit of Warren Buffett’s Berkshire Hathaway Inc., over a five-year period.
The information garnered by the hackers was then allegedly sent to associates in both the U.S. and Ukraine who performed the buying and selling of shares deemed profitable.
“Today’s international case is unprecedented in terms of the scope of the hacking at issue, the number of traders involved,” as well as the number of securities and the extent of illegal profit, SEC Chair Mary Jo White said at a press conference in Newark, New Jersey, yesterday.
White explained that by distributing their criminal activity across various accounts, the computer hackers were able to show their “market savvy.”
U.S. officials confirmed these individuals tapped into more than 150,000 press releases to gain information, such as corporate earnings data, which could then be used to predict stock market behaviors and make lucrative trades.
According to Bloomberg, U.S. prosecutors confirmed the nine men believed to be involved netted $30 million from the scheme, however according to a broader lawsuit brought by the Securities and Exchange Commission, the estimated amount earned from the criminal actions is said to be $100 million. More than two dozen individuals and companies are identified as defendants.
For now, only one professional U.S. trader has been arrested.
Vitaly Korchevsky was taken into custody Tuesday morning at his home in Glen Mills, Pennsylvania, and was later charged in Brooklyn on five counts, including conspiracy to commit securities and money laundering, Bloomberg confirmed.
The hedge fund Korchevsky operated, NTS Capital, is listed as one of the many defendants on the SEC’s lawsuit.
Other individuals named in the case are Vladislav Khalupsky, Leonid Momotok and Alexander Garkusha.
According to prosecutors, the suspects involved targeted more than 100 companies and conducted nearly “1,000 inside-the-window trades.”