NEW YORK, Aug. 11 (UPI) — Federal officials have filed criminal charges against nine people accused of taking part in a scheme to generate more than $100 million in profits off of corporate earnings and announcements before the information was released to the public.
The Securities and Exchange Commission said two Ukrainian men, Ivan Turchynov and Oleksandr Ieremenko, allegedly hacked into newswire services — like PR Newswire and Business Wire — to steal news releases about companies before the information was officially made public. Over the course of five years, the two men allegedly passed the information to traders.
“This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and profits generated,” said SEC Chair Mary Jo White. “These hackers and traders are charged with reaping more than $100 million in illicit profits by stealing nonpublic information and trading based on that information. That deception ends today as we have exposed their fraudulent scheme and frozen their assets.”
Criminal charges were filed in two separate indictments against Turchynov, Ieremenko and seven other individuals in U.S. District Courts in New York and New Jersey. A total of 32 individuals and businesses also face civil fraud charges filed by the SEC. The stolen information was allegedly transmitted over the Internet to traders in Russia, Ukraine, Malta, Cypyrus, France and the three U.S. states of Georgia, New York and Pennsylvania.
“This cyber hacking scheme is one of the most intricate and sophisticated trading rings that we have ever seen, spanning the globe and involving dozens of individuals and entities,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “Our use of innovative analytical tools to find suspicious trading patterns and expose misconduct demonstrates that no trading scheme is beyond our ability to unwind.”
In one instance, the SEC said those named in the complaint allegedly began selling their stock of one company before news about projected revenue losses was made public in May 2013. The traders made $511,000 during a 36-minute window between when a newswire received a news release and it made the information public.
The SEC complaint accuses the 32 defendants of violating federal antifraud laws and SEC antifraud rules, and seeks to have the defendants pay penalties and “ill-gotten gains.”
Indictment — USA v. Korchevsky, Khalupsky, Momotok and Garkusha
