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EARLIER THIS WEEK, US authorities charged 32 people and companies with an elaborate five-year hacking and trading scheme that made them $100 million and is being called the biggest ever of its kind.
The key to the alleged plot, which reads like something from the Hollywood film The Wolf of Wall Street, was almost unbelievably simple – press releases.
Here’s how one man and his family almost pulled off “one of the most intricate and sophisticated trading rings” in American history.
Half a million dollars in 36 minutes
On the morning of 23 July 2013, Panera, an American chain of wholesome bread and soup restaurants, prepared a statement.
It was to announce the company was adjusting its earnings expectations downward for the recently begun fourth financial quarter.
A strong earnings report or other positive news can cause a company’s stock to rise, while disappointing news can make it fall.
The release was just like countless others sent by publicly traded companies to business news services, that day.
Except for one thing.
As an unsuspecting investing public awaited the announcement, US federal authorities say a group made up of computer hackers and stock traders had already seen the release in the wire service’s computer system.
Then came short selling and CFDs by nine different individuals, hedge funds and stock brokers all charged with fraud this week, all using information contained in Panera’s press release.
In those six hours, members of the alleged insider trading ring made $2.4 million on a stolen press release.
In another incredible example, the group made $511,377 in profits from short selling and CFDs on a California-based technology company.
Between the time the press release was sent to the wire service, and the time it went public, there were just 36 minutes.
The Dubovoy Group
According to a criminal indictment made public on Tuesday, the operation revolved around Arkadiy Dubovoy, a 50-year-old Ukrainian businessman who lives in the US state of Georgia.
The complaint brought by the Securities and Exchange Commission (SEC), claims Dubovoy and his family, including 28-year-old son Igor, orchestrated the trading component of the plot.
They traded stocks in their own names, via companies they owned, and through four “straw owners” – a company director in name only, used to conceal the true owner’s identity.
The group used mainly construction companies, investment brokerages, and an advertising firm.
In one case, Dubovoy allegedly set up a trading account in the name of a Ukrainian ice-cream company manager.
The Hackers
The hacking component of the operation was allegedly run by two young Ukrainians working from Kiev – Oleksander Ieremenko (23) and Ivan Turchynov (27).
According to the charges, they used proxy servers and multiple online aliases to hide their intrusions into the networks of financial wire services.
They also posed as employees and customers of the news wires, and used phishing attacks (tricking actual employees into clicking links and revealing account passwords).
The hackers, led by the Ukrainian duo, even bragged about their ability to steal the non-public press releases, emailing video demonstrations to traders, in order to recruit them and persuade them to pay for the information.
The hackers would then distribute embargoed press releases among around two dozen trading companies in the US, Ukraine, Russia, France, Malta, Cyprus and the British Virgin Islands.
Once the trades were made, those companies would then funnel a portion of the profits back to the hackers, as their commission.
In total, the international hacking scheme allegedly raked in $100 million between 2010 and 2015, as SEC Chair Mary Jo White explained:
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.
Andrew Ceresney, Director of the SEC’s Division of Enforcement, added:
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.
Authorities said that beginning in 2010 and continuing as recently as May, they gained access to more than 150,000 press releases that were about to be issued by Marketwired in Toronto; PR Newswire in New York; and Business Wire of San Francisco.
The press releases contained earnings figures and other corporate information.
The case should sound a warning for anyone who uses email in a work setting, Paul Fishman, U.S. attorney for New Jersey, said on Tuesday.
Every employee of every company has to be vigilant about the emails they get from people who look like their friends or acquaintances, urging them to click on a link.
They should say to themselves every time that happens, ‘That seems like a really bad idea.’
Five defendants were arrested in the U.S. on Tuesday, and warrants were issued for four others in Ukraine.
The most serious charges in the indictment, wire fraud and securities fraud, carry up to 20 years in prison.
The SEC lawsuit named 17 individuals and 15 companies in the U.S. and abroad, in such places as Russia, France, Malta and Cyprus.
The agency is seeking unspecified fines and restitution against the 32 defendants.
To read the SEC’s detailed complaint in full, scroll down or click here.
Contains reporting by the Associated Press.
http://cdn.thejournal.ie/media/2015/08/comp-pr2015-163-1.pdf
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In general I am in favour of gun control in that I think it should be difficult to obtain a licence, there should be Garda Vetting and I also think that a Doctors Cert should be required. However once these conditions are complied with then I see no reason do deny a licence.
It is extremely rare that legal guns are used to commit a crime.
True but even gun owners like myself are often looked at by the Gardai as criminals when renewing our license….I think they resent us having guns in the first place.
It is difficult. We jump through hoops We are vetted, they have access to all our medical records. What else do you need?
When the owner’s licence is revoked, what happens to the firearm?
The gards take it and they then surrender it to a licenced gun Smith who will sell it on. The profit from the gun is given to charity im told.
@seeingeye It is used in a mass killing rampage
Dealer sells it and owner get the money less selling fee
It gets handed back to the shinners
Yes and then they recycle it into printer cartridges.
Which they use to print posters advertising their cheap diesel
And sell their cheap diesel to buy first class plane tickets.
To use the private health care facilities in other countries
And stay in the lap of luxury at the expense of a “friend” while undergoing treatment.
In preparation for the “cultural enrichment” program?
And all while Germans are arming themselves in record numbers. I wonder why
http://thelondonpost.net/more-germans-are-arming-themselves/
The garda take the gun and the owner never hears of it again and no money is handed over. Thats what happened me anyway, I had a rifle and was a member of a target shooting club, got bored so handed the gun into the garda.
” When you disarm the people, you commence to offend them and show that you distrust them either through cowardice or lack of confidence, and both of these opinions generate hatred.”
Niccolo Machiavelli
So it will end up only the criminals owning weapons? Sure why would you need a gun anyway with the hiards of Gardai keeping crime at its lowest level for years…………………………not
Hoards of….
Gus, these controls are already in place and many more. Ireland most likely has the most restrictive firearms licensing in Europe.
Sorry, meant to reply to p o foghlu
Gus. if you had made this comment 3 to 4 years ago you would have got nearly all thumbs down. As I’ve said many times, if a man with a sweeping brush meets a man with a baseball bath, the man with the sweeping brush is a dead man!
This article is listed as Gun Crime ? What is that about ?
It involves guns!
It’s my money, I just don’t like filling up the forms.
I had the licence for my grandfathers antique gun collection revoked because “I had no need to own a gun”. I had to surrender the guns to a smith and they they are just sitting there in a safe.
I had no live ammunition on the premises and from what I can tell these guns haven’t been fired for 50+ years. They are just a family heirloom. While I understand gun control is important, I hardly think many drug gangs are lining up at their local Garda stations to register their antique weapons form the 1910′s.
The only reason they are clamping down on what are legally held firearms is that they have failed miserably to deal with burglary.
That’s where the legally held firearms are getting into criminal hands. This is just passing the buck.
The proper criminals would thumb their nose at these firearms anyway, they can get new semi automatic pistols imported for peanuts.
Once again the law abiding get shafted for a bogus reason.
Do you think that “having a nice antique that I inherited from my grandad” is a sufficient reason to be awarded a firearms certificate?
Most revoking of firearms due to admin errors by guards eg license for bolt action wrongly issued as pump action, to correct error guards revoke original and issue new license?
Hope we never have to defend ourselves.. Big sticks all round.
A ‘gun-grab’ is the normal practice of a Fascist regime.
It says enough about this FG/liebour government, that they feel the need for an armed Gárda escort to go canvassing.
Well obviously the revoking of legally held firearms makes illegally held firearms just … disappear?
Really helped with the illegal AK’s used to kill a lad at that boxing match.
Previous posts are bang on -the Republic of Ireland already has the strictest gun laws in Europe, if not the western World. Gun controls are a necessary part of life – nobody wants to end up like the US – but removing sporting firearms from citizens that have no criminal record and use daid firearms within the legal parameters of sport is simply Fine Gael extending its fascist policies. All fascist states want their law abiding citizens disarmed, it is part of the ideology. It will have no effect on gun crime – the most mooted reason for depriving citizens of sporting firearms – because criminals have easy access to high tech weaponry that the state has been unable to impede, to a level of incompetence only equalled by their dismal record with the health service. Deflection by Fine Gael/Labour of the lowest sort – they know that mentioning firearms abolition will curry favour with John Q citizen that does not understand how tightly controlled they are in the first place. Despicable, playing on voters uninformed fears. The sooner Fine Gael.and Labour are out of power, the better for the country and its citizens.
Why are licenses being given when there is no good reason for the owner to have one in the first place!?
Have you ever heard of hunting or clay pigeon shooting? Some people enjoy those pastimes
They might have had a good reason when they initially applied. If they’ve held the licence a few years and renew it annually but no longer use it for it’s original purpose then the licence will be revoked as there’s no good reason to hold one.
Michael, respectfully, just because YOU have no good reason doesn’t mean others are the same way…. not everyone has to have the same hobbies.
No side-by-side double-barelled shotguns listed. Proper shotguns for proper shooting people.
If a gun owner is involved in an altercation with someone for any reason and the gardai get involved they can confiscate firearms from them as a matter of form just in case the dispute may continue. Just remove the possibility of the gun being used in the dispute. They may or may not get the gun back in the future. All depends on their role in the dispute.
have your say