Arrest in $4mn US insider trading case from law firm hacks

New York (AFP) –


US prosecutors announced criminal charges Tuesday against three hackers who allegedly made $4 million in illicit profits from insider trading of information pilfered from law firms advising on corporate merger.

The three defendants, two from Macau and one from China, successfully breached the computer networks of international law firms with New York offices by unlawfully obtaining a firm employee's credentials and then installing malware on the server of the law firm, the US Attorney's office in New York said.

The malware permitted the hackers to monitor law firm communications about more than a dozen transactions in 2014 and 2015 that were discussed or contemplated, including some deals that were never consummated.

The hackers then bought shares of companies that would later be acquired, winning great profit.

The hackers allegedly made $380,000 on trades of Intermune, a drug maker bought in 2014 by Germany's Roche; $1.4 billion in trades on Altera, which was bought by Intel in 2015; and $841,000 on Borderfree, which was acquired by Pitney Bowls in 2015.

"This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals," said US Attorney Preet Bharara.

Authorities arrested Iat Hong of Macau in Hong Kong, who is now pending extradition proceedings. The other two defendants, Chin Hung of Macau and Bo Zheng of China, are at large, a spokesman for the US Attorney's office said.