Hackers Broke Into An SEC Database and Made Millions From Inside Information, Says DOJ

Federal prosecutors unveiled charges in an international stock-trading scheme that involved hacking into the Securities and Exchange Commission's EDGAR corporate filing system. 'The scheme allegedly netted $4.1 million for fraudsters from the U.S., Russia and Ukraine,' reports CNBC. 'Using 157 corporate earnings announcements, the group was able to execute trades on material nonpublic information. Most of those filings were 'test filings,' which corporations upload to the SEC's website.' From the report: The scheme involves seven individuals and operated from May to at least October 2016. Prosecutors said the traders were part of the same group that previously hacked into newswire services. Carpenito, in a press conference Tuesday, said the thefts included thousands of valuable, private business documents. 'After hacking into the EDGAR system they stole drafts of [these] reports before the information was disseminated to the general public,' he said.

Those documents included quarterly earnings, mergers and acquisitions plans and other sensitive news, and the criminals were able to view it before it was released as a public filing, thus affecting the individual companies' stock prices. The alleged hackers executed trades on the reports and also sold them to other illicit traders. One inside trader made $270,000 in a single day, according to Carpenito. The hackers used malicious software sent via email to SEC employees. Then, after planting the software on the SEC computers, they sent the information they were able to gather from the EDGAR system to servers in Lithuania, where they either used it or distributed the data to other criminals, Carpenito said.

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