According to the news agency, federal agents arrested five of nine men accused in the insider trading plot during morning raids in Georgia and Pennsylvania. The indictments against them will be filed in New York and New Jersey. Four others were indicted on hacking and securities fraud charges but remain at large.
The hackers, who are thought to be in Ukraine and possibly Russia, allegedly infiltrated the computer servers of PRNewswire Association LLC, Marketwired and Business Wire, a unit of Warren Buffett's Berkshire Hathaway Inc.
Over several years, they siphoned 150,000 press releases including corporate data on earnings that could be used to anticipate stock market moves and make profitable trades. The hackers passed the information to their associates in the U.S., who allegedly used it to buy and sell shares of dozens of companies, including Panera Bread Co., Boeing Co., Hewlett-Packard Co., Caterpillar Inc. and Oracle Corp., through their retail brokerage accounts. Money was then shifted offshore through Estonian banks, according to a person familiar with the matter. The scheme allegedly netted more than $30 million, according to Bloomberg.
In dual indictments filed in New York and New Jersey, the government laid out the first major case of insider trading to cross into the cyber realm, exposing the vulnerabilitiesof financial markets in the digital age. Just as prosecutors deploy ever-more aggressive tactics like wiretaps to curb illegal trading, criminals have now leapt past them with a simple ruse: Steal information instead of persuading others to share it improperly. It's also a great equalizer. No longstanding Wall Street connections are needed to glean advance information from companies.
Named in the 23-count indictment filed in New Jersey are Ivan Turchynov, Oleksandr Ieremenko, Arkadiy Dubovoy, Igor Dubovoy and Pavel Dubovoy. The men face hacking and securities fraud related charges. Little is known about the men other than they allegedly worked with others to siphon inside information out of several public relations firms, Bloomberg reports.