24 May 2016
Visit dovetailsystems.com

SEC charges Estonian PR hackers

02 November 2005  |  6465 views  |  0 Eye with numbers_1

The US Securities and Exchange Commission has filed fraud charges against an Estonian financial services firm and two of its employees who allegedly used a 'spider' program to steal advance PR filings from the Business Wire Web site and made at least $7.8 million by illegally trading on the stolen data.

The SEC has filed an emergency federal court action against Estonian financial services firm Lohmus Haavel & Viisemann (Lohmus) and two of its employees, Oliver Peek, 24, and Kristjan Lepik, 28, both of Tallin, with conducting a fraudulent scheme involving the electronic theft and trading in advance of more than 360 confidential press releases issued by more than 200 US public companies.

The Commission alleges that the defendants fraudulently stole the confidential information from the Business Wire Web site and since January 2005 have made at least $7.8 million in illegal profits.

The complaint alleges that in June 2004 Lohmus became a Business Wire client for the sole purpose of gaining access to the company's secure client Web site. The defendants then surreptitiously used a "spider" program to gain unauthorised access to confidential information contained in impending nonpublic press releases.

The SEC filing says the information fraudulently stolen by the defendants has allowed them to strategically time their trades around the public release of news involving, among other things, mergers, earnings, and regulatory actions.
Using this information and several US brokerage accounts, the defendants have bought long or sold short the stocks of the companies whose confidential information they had stolen, and purchased options to increase their profits.

Linda Chatman Thomsen, director of the Commission's division of enforcement, says the court action "demonstrates that we will seek out and stop securities fraud wherever we find it".

"Whether in an old-fashioned boiler room or, as in this case, in the high-tech environs of the internet, such conduct will be met with a swift and vigorous enforcement response," says Thomsen.

However, a statement released by Business Wire claims that its news releases were not accessed prior to distribution and that its proprietary news distribution platform, NX, was not compromised.

Lorry Lokey, chairman and CEO, Business Wire, says no one "gained access to our news release file prior to distribution to the media and investment community Some of the SEC statements in its complaint have been misinterpreted".

But Business Wire says it played a key role in helping the SEC with their investigation and its senior technical staff worked closely with SEC investigators and helped them pinpoint the source of the problem.
KeywordsLEGAL

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

US financial crimes network compromised

US financial crimes network compromised

28 September 2005  |  8989 views  |  0 comments
SEC charges former Nextcard managers with fraud

SEC charges former Nextcard managers with fraud

29 September 2004  |  3767 views  |  0 comments
Reuters denies Intentia hacking allegations

Reuters denies Intentia hacking allegations

29 October 2002  |  4338 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Find out moreVisit www.abe-eba.euFind out more

Top topics

Most viewed Most shared
Big banks to be chief beneficiaries of fintech craze - Greenwich AssociatesBig banks to be chief beneficiaries of fin...
10965 views comments | 57 tweets | 45 linkedin
Barclays opens sandbox for gamification challengeBarclays opens sandbox for gamification ch...
9409 views comments | 32 tweets | 32 linkedin
satelliteDeloitte showcases integration of Ripple t...
7446 views comments | 19 tweets | 13 linkedin
Samsung Pay strikes Chinese deal with AlipaySamsung Pay strikes Chinese deal with Alip...
6972 views comments | 9 tweets | 12 linkedin
Mobile banking moves out of online shadowMobile banking moves out of online shadow
6857 views comments | 21 tweets | 23 linkedin

Featured job


Brussels (Belgium) or Paris (France)

Find your next job