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Hackers stole press releases to help insider traders earn millions

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In the first insider trading scheme of its kind, hackers and stock traders teamed up to steal thousands of unpublished corporate press releases. The hackers then used the financial information contained in the press releases to make illegal trades that earned up to $100 million, according to indictments and a civil suit unsealed yesterday in Brooklyn and Newark federal courts.

FBI assistant director-in-charge Diego Rodriguez told reporters,”This is the story of a traditional securities fraud scheme with a twist — one that employed a contemporary approach to a conventional crime.”

Prosecutors said that hackers based in Ukraine stole 150,000 unpublished press releases from PR Newswire, Businesswire, and Marketwired. The hackers then shared the releases with traders in the United States over the course of five years. Panera Bread, Home Depot, and Hewlett Packard are among the companies that had press releases stolen. The traders allegedly shared a portion of their illicit profits with the hackers in exchange for the information, and sent “wish lists” of companies whose information they wanted the hackers to access. Prosecutors called it “the largest scheme of its kind ever prosecuted.”

Two Ukrainian men, Ivan Turchynov, 27, and Oleksandr Ieremenko, 24, are accused of hacking into the PR newswires. Seven traders — Pavel Dubovoy, 32, of Ukraine, and Arkadiy Dubovoy, 51, Igor Dubovoy, 28, Vitaly Korchevsky, 50, Vladislav Khalupsky, 45, Leonid Momotok, 47, and Alexander Garkusha, 47, of the United States — are accused of using the stolen press releases to make illegal trades that earned a profit of more than $30 million.

The Securities and Exchange Commission (SEC) filed a related civil suit against 17 individuals and 15 corporations, claiming that the stolen information generated more than $100 million in illegal profits.

“Today’s indictment sheds light on an increasingly complex threat to both our country and the financial sector,” Rodriguez said. “But just as criminals continue to develop relationships with one another in order to advance their objectives, the law enforcement community has developed a collaborative approach to fighting these types of crimes.”