Insider traders used hackers to steal press releases, indictments allege
Nine traders, money managers and hackers have been indicted in an alleged scheme that involved hacking into press releases before their distribution and using the information for stock purchases.
The scheme involved hacking into the computers of companies that published press releases, including Marketwired, PR Newswire and Business Wire, report the Wall Street Journal (sub. req.), the New York Times DealBook blog and Reuters.
The plotters accessed 150,000 news releases, generating $30 million in unlawful profits since 2010, according to federal indictments in Brooklyn and New Jersey (PDF). A related civil suit by the Securities and Exchange Commission against 32 defendants says the scheme generated $100 million in illegal profits. Hackers were paid a flat fee or a percentage of the profits, the SEC says.
The New Jersey indictment charges two computer hackers who live in Ukraine and three traders who are related. A Brooklyn indictment charges a former hedge fund manager, a former broker-dealer and two U.S. residents living in Georgia. Charges include securities fraud and conspiracy.
