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US authorities on Tuesday charged eight people in a scheme to profit from stolen corporate information hacked from a government database, court papers showed.
The scheme, which involved suspects in Ukraine, Russia and the United States, pulled in more than $4.1 million ill-gotten gains from trading on corporate information before it became public, according to the Securities and Exchange Commission.
Authorities said the plot was carried out between 2016 and 2017, and was the second phase of a long-running effort that originally targeted news agencies which publish corporate press releases.
By trading on and selling early access to sensitive information from annual and quarterly reports and other filings, before they were released to the public, the defendants were able to beat the market and make a profit, court papers said.
A federal grand jury in New Jersey filed 16 criminal charges against Ukrainian national Oleksandr Ieremenko and Ukrainian resident Artem Radchenko, and aims to seize all ill-gotten property tied to the alleged conspiracy.
The SEC also took legal action against Ieremenko, who also was charged in the 2015 scheme, along with six other individuals and two corporate entities.
‘Today’s action shows the SEC’s commitment and ability to unravel these schemes and identify the perpetrators even when they operate from outside our borders,’ Stephanie Avakian, co-director of SEC enforcement, said in a statement.
The SEC’s Electronic Data Gathering, Analysis, and Retrieval system, known as EDGAR, is a repository of corporate disclosures meant for distribution to investors simultaneously.
In one instance, Ieremenko and Radchenko allegedly netted $270,000 by investing in a public company after stealing an annual report from EDGAR, which showed record annual earnings, in the hour before it was released to the public, according to federal prosecutors.
In its parallel legal action, the SEC named three Ukrainians, a Russian and two Los Angeles-based traders accused of trading on the stolen information.
One, Andrey Sarafanov of Dedovsk, Russia outside Moscow, allegedly traded on behalf of three Moscow residents from whom the SEC is also seeking the return of ill-gotten gains.