Kyiv investment firm fined $30mn for hacking corporate releases

By bne IntelliNews September 15, 2015

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Ukrainian investment banking firm Jaspen Capital Partners and its chief executive Andriy Supranonok will pay $30mn to settle civil insider trading charges after hacking masses of corporate news releases from newswire distributors, the US Securities and Exchange Commission (SEC) said.

Jaspen Capital Partners and Supranonok are the first of 34 defendants to settle SEC charges over alleged theft of more than 150,000 press releases from Business Wire, Marketwired and PR Newswire before the news became public, raking in more than $100mn in trading profits for them and their clients.

Jaspen Capital Partners and its CEO agreed to pay back "ill-gotten gains" they allegedly received from 2010 to 2015 by using information from the hacked press releases. According to the SEC, the fraud was perpetrated over a five-year period.

US officials said traders would give hackers "shopping lists" of press releases they wanted to see in advance and then make trades based on them. Nine of the defendants also face criminal charges, while Jaspen Capital Partners and Supranonok were not criminally charged, Reuters reported.

US authorities described the case as the biggest insider-trading scheme to date involving a cybercrime network operated out of Kyiv.

"Today's settlement demonstrates that even those beyond our borders who trade on stolen nonpublic information and use complex instruments in an attempt to avoid detection will ultimately be caught," Andrew Ceresney, SEC's director of enforcement, said in a statement.

The case again highlights the growing sophistication of Ukrainian and Russian hackers in perpetrating financial fraud schemes. In 2014, two members of an international cybercrime group pleaded guilty in a US federal court to working an identity theft and fraud scheme that almost netted $15mn. According to authorities, the two men were recruited by Kyiv-based organisers.

According to RFE/RL, the US Justice Department in a parallel criminal case also indicted nine of the same US and Ukrainian defendants on criminal charges, including securities fraud, computer fraud and conspiracy, in courts in New Jersey and Brooklyn, New York.

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