Ukrainian hackers for hacking into the Securities and Exchange
Commission’s EDGAR filing system and stealing sensitive
market-moving reports of companies before their public release.
EDGAR, or Electronic Data Gathering, Analysis, and Retrieval, is
an online filing system wherein companies submit their financial
filings. The system processes around 1.7 million electronic filings
per year.
EDGAR lists millions of filings on corporate disclosures—ranging
from annual and quarterly earnings report to sensitive and
confidential information on mergers and acquisitions, which could
be used for insider-trading or even manipulating U.S. equity
markets.
The two Ukrainian hackers, Artem Radchenko and Oleksandr Ieremenko
(27-years-old), hacked EDGAR
system to extract such sensitive non-public reports of publicly
traded companies and sold that information to different groups of
traders.
According to an indictment [PDF] unsealed
on Tuesday, among the two hackers, 6 other individual traders in
California, Ukraine, and Russia have also been charged for using
the stolen information to make stock trades worth over $4.1 million
between 2016 and 2017.
[3]
“The traders compensated the hackers, including Ieremenko, for the
information by either paying regular fees for access to the hacked
press releases or by kicking back a portion of their trading
profits,” the indictment reads.
phishing emails to SEC employees to gain access to agency’s network
and then infected some of its computers with a malicious program
that automatically extracts documents.
The scheme extracted “test filings” that companies submitted to
EDGAR hours or even days before actual filings that were intended
to be made public.
“In some instances, these test filings included submissions by
public companies that contained earnings results and other material
information that the companies had not yet released to the public,”
the indictment reads.
“The hacked material nonpublic information was then transmitted
to traders who, in connection with approximately 157 earnings
announcements, used it to place profitable securities trades before
the information was made public.”
after it appeared in SEC servers—but before it was made
public—which was then used to ultimately made illegal profits of
approximately $307,000 by short-selling trades within roughly 35
minutes after the information went public.
Ieremenko, who remains at large in Ukraine, had also previously
been charged in 2015 over the theft of over 100,000 unpublished
press releases from PRNewswire, Business Wire, and West Corp’s
Marketwired in order to make profitable trades.
A federal grand jury in New Jersey charged Ieremenko and
Radchenko with 16 counts of hacking- and fraud-related charges and
aimed to seize all ill-gotten property tied to the alleged
conspiracy.
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