Alleged $30 Million Hacking, Insider Trading Scheme Leads to Indictments
Delaware County money manager Vitaly Korchensky is one of nine people charged in an insider trading scheme aimed at hacking into corporate press releases before they were published.
The group allegedly made $30 million by making trades using information they obtained in the news releases. The Associated Press reports that Korchensky and three others were charged with conspiracy and securities fraud.
The case is connected to a wider scheme involving 30 defendants from inside and outside the United States charged with generating $100 million by using the illegal information to make trades. The scheme was allegedly spearheaded by two Ukranian men who hacked into two or more newswire services and steal hundreds of corporate earnings announcements.
“This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and profits generated,” said Securities and Exchange Commission Chair Mary Jo White. “These hackers and traders are charged with reaping more than $100 million in illicit profits by stealing nonpublic information and trading based on that information. That deception ends today as we have exposed their fraudulent scheme and frozen their assets.”
The Philadelphia Business Journal reports that the traders created “shopping lists” or “wish lists” describing which press releases they wanted. “The indictment says the trades were made on stolen press releases containing material nonpublic information about publicly traded companies that included, among hundreds of others: Align Technology Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc.,” the Business Journal reported.
The Philadelphia Inquirer reports that “in one instance outlined in the indictment, the group made more than $600,000 trading the stock of Caterpillar Inc. using a news release boasting of a 27 percent climb in third quarter revenues.”