9 people in the United States and Ukraine were charged with making $30 million by hacking into business newswire services and learning corporate press releases before they were published. They monetized this information by trading on it ahead of the pack on Wall Street.
So, who was charged? Two people described as Ukrainian hackers, 6 stock traders (5 of them in the US) and even a US real estate developer. Charges included offenses such as securities fraud, computer fraud and conspiracy to commit money laundering. The police revealed that for about 3 years starting in 2010, the group gained access to news releases that weren’t yet issued by a number of business newsmakers: Marketwired of Toronto, PR Newswire of New York and Business Wire of San Francisco. The compromised news releases contained earnings figures and other important data, which was used to make trades, exploiting a time gap ranging from hours to three days.
5 defendants were arrested earlier this week, and arrest warrants were issued for 4 people in Ukraine. As for the hacking part, the computer “experts” were paid based on how much the traders earned. Apparently, the hacks were revealed when Business Wire hired a cybersecurity company to test its systems and make sure they are secure.
For example, the group made over $600,000 by trading the stock of Peoria, Illinois-based Caterpillar Inc. in 2011 exploiting a news release containing information on the company’s 3Q profits rising 27%. Another $1.4m was earned trading stock in San Jose, California-based Align Technology in 2013 ahead of a press release saying that annual revenue increased by more than 20%.