By Brenda Flanagan
Correspondent
Imagine standing on Wall Street with a crystal ball that tells you which stocks will take off and which will tank. You could make millions.
Today federal investigators in New Jersey and New York indicted nine people who made $30 million but instead of crystal balls, they allegedly used computers to hack into three different public relations news wires and access privileged stock information hours before it went public.
“That information can be news of an impending merger, a divestiture, a stock split. Those hackers stole well over 100,000 confidential news releases before they were distributed,” U.S. Attorney Paul Fishman said.
The indictments state that two alleged hackers located in Ukraine uploaded all that stolen news data to secret computer servers that were then accessed by illicit traders, targeting companies traded on the NASDAQ and NYSE.
“And then placing thousands of trades through a network of U.S. and overseas traders located in the Russian Federation, Ukraine, Malta, Cyrus, France, New York, Pennsylvania, and Georgia — geographies electronically connected by this illicit network,” Securities Exchange Commission Chair Mary Jo White said.
“What’s behind those charges was an unholy alliance of shadowy computer hackers and criminal securities traders. The traders used their market sophistication and thier experience to decide when and how to exploit that stolen financial information,” said Eastern District of New York Acting U.S. Attorney Kelly Currie.
The indictment cites one case in October of 2013 when hackers phished information from MarketWired that Panera was going to revise its earnings announcement. Traders turned that one hot tip into a cool million-dollar profit and investigators say, sent hackers their cut of the profits. But for all its high tech scheming the U.S. Attorney noted that the system depended on simple phishing, those emails urging, “click this link!”
“No one should click on those links without checking to make sure that’s where it comes from because if you look at the indictment you will see these sophisticated hackers were using that, in some way very rudimentary technique to get access to the credentials — the login credentials, the passwords, the IDs — of people at these newswire companies,” Fishman said.
Investigators say they caught cyber crooks by identifying large stock buying patterns and Homeland Security Secretary Jeh Johnson urged companies to report when they’ve been hacked.
“It is critical that we promote and encourage the private sector to share cyber info and cyber threat indicators with Department of Homeland Security,” Johnson said.
Most of the alleged rogue traders are in custody. The U.S. Attorney says warrants have been issued for the two Ukrainian hackers who remain at large.