Prosecutors in the U.S. have charged three citizens of China with trading on corporate secrets they got their hands on by hacking the networks and servers of law firms that were working on mergers and acquisitions.
According to a report by Reuters, Iat Hong of Macau, Bo Zheng of Changsha and Chin Hung of Macau were charged with wire fraud, insider trading and computer intrusion in an indictment filed in Manhattan federal court. Reuters reported the three made more than $4 million by trading shares of five or more companies based on the information they gleaned from the hack.
Some of the information was about deals involving chipmaker Intel and computer equipment company Pitney Bowes. In a related civil suit, the U.S. Securities and Exchange Commission said the three Chinese men named themselves as working at information technology companies.
“This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: You are and will be targets of cyberhacking, because you have information valuable to would-be criminals,” U.S. Attorney Preet Bharara in Manhattan said, according to the report.
The scam started in the beginning of April 2014, with the three hacking into a U.S. law firm and going after the email accounts of partners that worked on M&A, noted Reuters. Prosecutors didn’t name the law firms, but the report said one matched the description of law firm Cravath, Swaine & Moore. That firm represented Pitney Bowes when it acquired Borderfree in 2015. Cravath declined to comment on the report. According to the indictment, the defendants installed malware on the servers to get access to emails the lawyers sent. The indictment also contends the three stole and traded on information from Intel’s buy of Altera in 2015.