Overseas Traders Face Charges for Hacking SEC's Public Filings Site
Source: The Wall Street Journal.
U.S.
Overseas Traders Face Charges for Hacking SEC’s Public Filings Site
Network accused of profiting off of 157 earnings announcements
By Dave Michaels
Updated Jan. 15, 2019 10:39 a.m. ET
WASHINGTON—U.S. authorities charged traders with breaking into a government computer system that stores market-moving corporate data, moving on a breach that raised questions about the government’s ability to protect sensitive data in a relentless era of computer hacking. ... The Securities and Exchange Commission on Tuesday said a network of overseas traders made $4.1 million off 157 earnings announcements. It alleged a 27-year-old Ukrainian hacker, Oleksandr Ieremenko, spearheaded the intrusion of its trove of corporate filings and transmitted the information to other people who made the trades based upon an early view of filings, according to a civil lawsuit filed in the U.S. District Court for the District of New Jersey.
The SEC disclosed the hack in September 2017. (1) Some SEC officials were aware of the breach in 2016 but initially failed to connect it to possible illicit trading. After the incident, the SEC stopped taking in some types of vulnerable data, including personally identifying information of corporate officers.
The scheme benefited from malware that Mr. Ieremenko planted on SEC computers and was the second part of a long-term effort to hack repositories of lucrative data, following an earlier phase that targeted newswire services that disseminate corporate earnings releases, the SEC lawsuit said. ... The information allegedly stolen by the hackers included filings that public companies use to test their access to the SEC’s Electronic Data Gathering, Analysis and Retrieval system, known as Edgar. The test filings sometimes contained data that was to be released to investors later as part of the company’s quarterly earnings announcement.
Two defendants in Los Angeles were part of the network of traders who paid Mr. Ieremenko for access to the information, the SEC said. Sungjin Cho, 38, and David Kwon, 44, were also charged as defendants in the SEC lawsuit. ... Several traders based in Russia were also part of the scheme, the SEC lawsuit alleged. One of the Russian traders, Andrey Sarafanov, also participated in the hack of the newswire systems that began in 2010, the SEC complaint says. ... None of the named defendants could immediately be reached for comment. ... The SEC and federal prosecutors scheduled a news conference for 11 a.m. EST Tuesday to announce the charges. The SEC lawsuit seeks disgorgement of ill-gotten gains and civil monetary penalties.
Write to Dave Michaels at dave.michaels@wsj.com
(1) https://www.wsj.com/articles/sec-discloses-edgar-corporate-filing-system-was-hacked-in-2016-1505956552
Read more: https://www.wsj.com/articles/overseas-trader-network-charged-with-hacking-secs-corporate-filing-trove-11547562262
U.S. authorities charged overseas traders with hacking a government computer system that stores market-moving corporate data, accusing them of profiting off 157 earnings announcements
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