How valuable is information in the digital era? When it comes to trading, even a single piece of confidential data can be of great value. A group of Ukraine-based hackers has recently proven this point by hacking newswires and selling confidential information abroad. Companies like Business Wire, PR Newswire, and Marketwired serve as important information hubs for companies, and are usually entrusted with classified information. Turns out, they are also a businesses’ weak spot.
Oleksandr Ieremenko, Vadym Iermolovych and Ivan Turchynov made over $100 million by illegally accessing press releases stored online and selling them to foreign investors, to receive up to 40% of the trading revenues.
As a result of a joint actions between American and Ukrainian secret services, all three have been detained but not prosecuted back in 2012. According to Ukrainian laws, citizens cannot be extradited to another country, even to the United States. The group has not been charged in Ukraine, as well (at least, not then). Ukrainian intelligence agents then threatened and forced one of the hackers to cooperate, effectively diverting the flow of illegal money from their foreign counterparts to domestic gangs.
Vitaly Korchevsky, Ukraine-born Baptist pastor, US citizen and former vice president of Morgan Stanley, was also contacted by the perpetrators at one point of time. For Vitaly, who had over 10 years in finance, stolen press releases were synonymous to easy money. Here is one of the stories, illustrative of the whole procedure. Dendreon Pharmaceuticals uploaded a press release on PR Newswire at 3:34PM. The press release was supposed to be released on 4:01PM, one minute after the closing bell. Korchevsky communicated a purchase of 1,100 put options at 3:56PM, 4 minutes before the market closure. The next day “the investor” sold his options, making over $2.3 million in the process. Unlike some of his colleagues in Eastern Europe, Vitaly got arrested and is now being prosecuted for insider trading. He has amassed at least $14 million in the period between 2011 and 2015. As many as 150,00 press releases have been stolen in the process and used for malicious purposes.
“Just about every organization that compiles financial data that could be useful for traders has, at some point, been hacked,” stated Scott Borg, director of the US Cyber Consequences Unit. “All the bureaus of economic analysis from major countries in the world have almost certainly been hacked.”
In the coming years, cyber crime and cyber security (as a logical answer to the former) will certainly become a more discussed topic. In the business circles, too. Companies worldwide have spent $90 billion on cyber security in 2017 alone. With information becoming ever more valuable, an increase in associated expenses can be expected. Until then, hackers have a chance to capitalize on illegally retrieved press releases and other sensitive data.
