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Feds claim traders made millions off “hacked” press releases

(Photo: Sue Waters/Flickr Creative Commons)
(Photo: Sue Waters/Flickr Creative Commons)

The U.S. Department of Justice announced criminal charges against five named and four unnamed individuals on Tuesday over an alleged scheme that involved making millions of dollars from stolen press releases.

According to federal prosecutors, the scheme involved hackers, middlemen and traders working together over the course of five years to steal yet-to-be-published press releases from three news wires — Marketwired, BusinessWire and PRNewswire — the contents of which contained market-moving information.

The three victim companies are in the business of distributing press releases on behalf of companies to journalists, marketers, traders and others through third-party news wires, terminals and over the Internet. Some of their corporate clients include Boeing, Clorox, Caterpillar, Hewlett-Packard and the Home Depot.

According to charging documents unsealed on Tuesday, hackers deployed malware against Marketwire and PRNewswire in 2010, gaining access to confidential press release information stored on their servers. A similar tactic was used a few years later against Business Wire, where hackers were said to have obtained usernames and passwords for some 200 employees.

Hackers who compromised the three market wires were sent a “shopping list” by traders of companies whose press releases were to be targeted, according to charging documents unsealed on Tuesday. Those hackers were then sent a “shopping list” of companies to target by the middlemen; the documents obtained from the hacks were eventually passed along to traders who acted on the non-public information, prosecutors said.

It was not immediately clear how many press releases were stolen from the three companies altogether, though the charging document said some 40,000 were taken from Marketwire alone. Those press releases included, among other things, the confidential 8-K documents outlining a company’s earnings that are typically released at a predetermined time and usually contains information that influences the price of a stock.

According to prosecutors, the five-year international trading scheme netted the nine men around $100 million in illicit trades.

The Securities and Exchange Commission (SEC), the federal body that regulates Wall Street, has announced separate civil charges in the matter.


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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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