The U.S. Department of Justice and Securities and Exchange Commission said Tuesday they filed charges against a total of 32 people who allegedly took part in a scheme to hack newswire services and trade on information that was pending release to the public.
Continue Reading Below
According to federal officials, the defendants made a combined $100 million in illegal profits. The group includes two Ukrainian men who are believed to be the hackers, plus 30 other people from the U.S. and elsewhere who made the stock trades.
The SEC initially filed fraud charges under seal on Aug. 10 in the U.S. District Court in Newark, N.J. The Justice Department announced criminal charges against several of the same defendants, including the alleged hackers, Ivan Turchynov and Oleksandr Ieremenko.
The Ukrainian men are said to have led the scheme over a five-year period. They hacked at least two newswire services, stealing hundreds of corporate earnings announcements before they were released.
The two hackers created a secret location on the Internet to send stolen data to traders in Russia, the Ukraine, Malta, Cyprus, France, and three U.S. states: Georgia, New York and Pennsylvania. In some cases, the traders shared a portion of their illicit profits with the hackers.
The SEC described one case that occurred on May 1, 2013. The hackers stole a news release from an unnamed company that cut its earnings and revenue guidance. Traders began shorting the stock and selling CFDs just 10 minutes after the announcement was sent to a newswire. Within a 36-minute timeframe, they reaped $511,000 in trading profits once the announcement was made public and the company’s shares dropped.
PR Newswire confirmed that information was stolen from its system as part of the scheme.
"PR Newswire has cooperated with the relevant government agencies conducting the investigation that led to today's charges and we would like to commend the U.S. Government for their diligence and continued focus on this matter," PR Newswire CEO Robert Gray said in a statement.