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Hackers facing federal securities fraud charges

Nine individuals are facing serious federal charges in Pennsylvania and neighboring states following an investigation into a widespread hacking operation. The case is related to a civil lawsuit filed by the U.S. Securities and Exchange Commission, in which 15 corporate entities and 17 individuals are accused of stealing inside information used to secure nearly $100 million in profits. The securities fraud case has led to increased awareness of the lack of security among many of the world's top corporations.

The nine men are accused of hacking into newswire service systems in an effort to gain access to various press releases before they were made public. They then distributed those press releases to traders who paid to access that information, which focused on sensitive corporate matters such as financial results. The hackers made money both by charging for the information, and collecting a portion of the profit made by trades that used the inside information.

Of the nine men charged in the case, five have already been placed under arrest. International warrants have been issued for the remaining four. The SEC has already requested and been granted asset freezes to assist in recovering any civil penalties that may result from the civil case against these individuals.

In collecting evidence for this case, the SEC is said to have sifted through gigabytes of data, including information on millions of different traders and earnings announcements numbering in the thousands. In structuring a defense to the securities fraud charges, those accused may focus on the validity of the evidence used to link them with any criminal activity. The cases will move forward in federal courts in Pennsylvania and nearby states, and the media attention focused on those cases may spur many corporations to shore up their online security measures.

Source: Reuters, "Hackers stole secrets for up to $100 million insider-trading profit: U.S.", Noeleen Walder, Jonathan Stempel and Joseph Ax, Aug. 12, 2015

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