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The
case alleges that a ring of cyber criminals from Ukraine hacked
into disseminators of news releases and stole press releases
about corporate news before it was made public, the source said.
The group, according to prosecutors, then passed the information
to a group of traders, who were mostly based in the United
States and reaped at least $30 million in illicit profits by
trading in hundreds of companies, including Fortune 500 firms,
using the non-public information, the source said.
The case, brought jointly by the U.S. Attorney's offices in
Brooklyn and New Jersey, marks the first time prosecutors have
alleged that a securities fraud scheme was based on hacked
inside information. It is also the largest known suspected case
of hacking that resulted in insider trading.
Federal prosecutors in Brooklyn and New Jersey could not
immediately be reached for comment outside regular U.S. business
hours.
The lead trader in the case is suspected of making more than $17
million, according to the source.
Until now, the U.S. Securities and Exchange Commision has
brought only a handful of civil cases against hackers.
In 2007, the agency filed a civil case against a Ukrainian
trader named Oleksandr Dorozhko, accusing him of hacking into
IMS Health <IMS.N> and stealing information on earnings that he
used to make profitable options trades. In 2010, a federal court
ordered Dorozhko to pay $580,000.
(Writing by Mica Rosenberg and Supriya Kurane; Editing by Ken
Wills and Edmund Klamann)
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