Three Chinese traders hacked into the computer systems of two prestigious US law firms. They then used the data for insider trading, which generated at least $4 million in illegal profits.
According to SFGate, Ian Hong, Bo Zheng and Hung Chin were accused by the Securities and Exchange Commission and the U.S. attorney's office for the Southern District of New York for illegal profits from stock trades based on nonpublic information from April 2014 to late 2015. The Chinese nationals were also charged with conspiracy to commit securities fraud, wire fraud, computer intrusion and other criminal counts.
USA Today reported that the suspects used public information and allegedly bought stocks in companies involved in the deals, and afterward, sold the investments for profit when the mergers or acquisitions were announced. U.S. Attorney for the Southern District of New York, Preet Bharara, said that the allegations highlight the vulnerability of super sensitive law firm records.
"This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: You are and will be targets of cyber hacking because you have information valuable to would-be criminals," Bharara said.
The scheme was carried out using both offshore and US accounts. One defendant, Ian Hong, was arrested in Hong Kong on Christmas Day, but the other two suspects remain at large. The law firms that were targeted were not identified in the indictment, however, a previous report said that a federal investigation is conducted whether hacking attacks at Weil Gotshal & Manges LLP and Cravath Swaine & Moore LLP involved theft of private information for insider trading.
The accused also allegedly targeted emails of Intel's law firm that the company retained for a contemplated acquisition of Altera. Prosecutors allege that the suspects amassed more than 210,000 in Altera shares.
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