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Estonian Hackers Charged With Cracking Business Wire
John Stith
Staff Writer
2005-11-03
 Insider Reports RSS Feed
The Securities and Exchange Commission (SEC) went after two Estonian men, charging them with hacking Business Wire, distributor of corporate press releases. The SEC say they utilized information gleaned to make profitable trades.
Lohmus, Haavel & Viisemann, an Estonian financial services firm and more specifically, two of its employees, Oliver Peek and Kristjan Lepik with a scheme involving electronic theft and trading of more than 360 confidential press releases issued by more than 200 U.S. companies. The SEC says since January 2005, the company has made at least $7.8 million in illegal profits.
"Our action today 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," said Linda Chatman Thomsen, Director of the Commission's Division of Enforcement.
The Commission's complaint alleges that, in June 2004, Lohmus became a client of Business Wire for the sole purpose of gaining access to Business Wire's secure client website. Once defendants had access, they surreptitiously utilized a software program, a so-called "spider" program, which provided unauthorized access to confidential information contained in impending nonpublic press releases of other Business Wire clients, including the expected time of issuance.
The complaint further alleges that 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 several U.S. brokerage accounts, the defendants have bought long or sold short the stocks of the companies whose confidential press release information they have stolen, and purchased options to increase their profits.
This is another dimension to hacking and cybercrime. These gentlemen managed to garner access to the internal workings of a major press release distribution network and used the information to their advantage. Many times the crimes are denials of service or phishing scams but this is no less significant and one more area that could stand to be watch a little more closely.
About the Author:
John is a staff writer for SecurityProNews covering cyber security.
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