The United States Securities and Exchange Commission (SEC) has brought criminal charges against five Russian nationals for their involvement in stealing corporate information and indulging in insider trading.
The authorities have already extradited one of the accused from Switzerland.
A Blend of Hacking and Trading
Announced on Monday, the accused have been profiting from stolen corporate information for several years, which they obtained by hacking into the systems of two US-based regulatory filing agent companies, thus obtaining announcements like quarterly earnings reports before they went public.
One of the accused, Ivan Yermakov, hacked into the systems of the two filing agents and sent the information to the four other co-defendants, Vladislav Kliushin, Nikolai Rumiantcev, Mikhail Irzak and Igor Sladkov, who executed the trades using brokerage accounts in Denmark, the United Kingdom, Cyprus and Portugal.
The alleged perpetrators used 20 different brokerage accounts registered across various countries from 2018 through 2020 to trade using stolen information prior to 500 corporate earnings reports being released, and they generated profits of at least $82 million.
According to the complaint, all of the defendants allegedly shared the profits by funneling them through a Russian information technology company.
All of these defendants have been charged for violating antifraud provisions of the US securities law, and the regulator is now seeking final judgment for penalties and disgorgement. In addition, it wants to enjoin the accused from committing future violations of the antifraud laws.
“With this action, the SEC, using its powerful analytical tools, has exposed a highly sophisticated and deceptive scheme to steal and monetize non-public corporate information,” Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, said in a statement.
“While we remain steadfast in our commitment to protect the integrity of our securities markets against bad actors no matter where they are located or what sophisticated tactics they use, we strongly encourage companies to shore up their safeguards against, and remain vigilant for cyber breaches that compromise their non-public information.”
