NEWARK, N.J. — A group of Ukrainian hackers worked with securities traders in the U.S. to make $30 million by breaking into the computer systems of companies that publish news releases about publicly traded companies and trading on the information before it was made public, federal prosecutors said Tuesday.
Federal prosecutors in New Jersey and New York City, along with Homeland Security Secretary Jeh Johnson and Securities and Exchange Commission Chairwoman Mary Jo White, will discuss the case during a news conference Tuesday in Newark, New Jersey.
An indictment against five people was unsealed in Newark, and another was filed under seal in New York City's Brooklyn borough. The group includes two people described as Ukrainian computer hackers and two securities traders from Alpharetta, Georgia.
They are charged with 23 counts, including securities fraud, wire fraud, fraud in connection with computers, aggravated identity theft and money laundering conspiracy.
Prosecutors allege the scheme started in February 2010, and the defendants gained access to 150,000 news releases from services including Toronto, Canada-based Marketwired, New York-based PR Newswire and San Francisco-based Business Wire.
According to the indictment, the conspirators hacked into the news services' computer networks to gain access to unpublished news releases that contained nonpublic information about companies. The traders, identified in the indictment as Arkady Dubovoy, Pavel Dubovoy and Igor Dubovoy, would use the information to execute trades just before the information was made public, usually shortly after the close of markets.
The computer hackers in the group would be paid based on how much the traders profited from the trades, prosecutors alleged.
The group made more than $600,000 by trading shares of Peoria, Illinois-based Caterpillar Inc. in 2011 using information in a confidential news release that reported the company had increased third-quarter profits by 27 per cent after taxes, according to the indictment. In similar fashion, it profited more than $1.4 million trading shares of San Jose, California-based Align Technology in 2013, the indictment said.
Caterpillar declined to comment. Align Technology didn't immediately respond to a request for comment.
David Porter, The Associated Press