The US Securities and Exchange Commission (SEC) has charged three Chinese nationals with fraudulently trading on hacked nonpublic market-moving information stolen from two American law firms, racking up almost $3 million in illegal profits. The SEC alleges that Iat Hong, Bo Zheng, and Hung Chin executed a deceptive scheme to hack into the networks of two law firms and steal confidential information pertaining to firm clients that were considering mergers or acquisitions.
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The Chinese trader allegedly executed a deceptive scheme to hack into the networks of two law firms and steal confidential information pertaining to firm clients that were considering mergers or acquisitions.This involved installing malware on the law firms’ networks, compromising accounts that enabled access to all email accounts at the firms, and copying and transmitting dozens of gigabytes of emails to remote internet locations.
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“We used enhanced trading surveillance and analysis capabilities that we developed over the last few years to identify the broad scope of the defendants’ alleged scheme, including the use of both U.S. and offshore accounts to carry it out,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division. “This action demonstrates our commitment and effectiveness in rooting out cyber-driven schemes no matter how sophisticated.”
“As we allege, the defendants’ ‘hacking to trade’ scheme involved numerous levels of deception as they gained broad access to the nonpublic networks of two law firms, stole confidential information and then used it for substantial personal gain,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement. “This action marks the end of their alleged deception and serves as a stark reminder to companies and firms that your networks can be vulnerable targets.”