The one thing that all American law and culture strives to have in common is a sense of fairness unique to this country. With that in mind, the Securities and Exchange Commission (SEC) in conjunction with the New York Stock Exchange have some pretty stringent rules on what is known as “insider trading,” and using access to information not available to the public for profit on publicly traded securities.
For a number of years now, at least since 2012, hackers traced to Russia have been getting into the computers at the Dow Jones & Co., Inc., owners of a number of news publications including the Wall Street Journal, for sensitive information not yet released to the public. Last week, Dow Jones & Co., released a statement that they were working with a cybersecurity firm and authorities over a targeting of 3,500 customer-related records. The reality, according to Bloomberg, is that there is an ongoing investigation involving the SEC, FBI and the Secret Service for over a year related to insider trading:
…Two of the people familiar with the investigation said the hackers sought information including stories being prepared for publication.
Information embargoed by companies and the government for release at a later time could be valuable to traders looking to gain an edge over other market participants, as could stories being prepared on topics like mergers and acquisitions that move stock prices.
In the USA, we call this insider information and using it BEFORE it is published is absolutely, positively illegal. (This is what landed Martha Stewart in federal prison.)
All government officials declined comment as the investigation is ongoing. However, it does highlight the new frontier in white collar crime: cyber and the internet.
Market-moving, nonpublic information used to trade hands in secret meetings. Hackers are now stealing sensitive information and selling it to traders. This new vulnerability in the financial markets is challenging law-enforcement officials who are trying to keep pace with cyber-criminals’ rapidly evolving moneymaking schemes.
Dow Jones, and the offices of the Rupert Murdoch news operations, of which Dow Jones is just one part, are not the only news companies targeted by hackers interesting in trading information to sell. Earlier this year, arrests were made in connection with hacks coming from Ukraine on units held by Berkshire Hathaway, the holding company Warren Buffett runs.
Those hackers broke into the servers of PRNewswire Association LLC, Marketwired and Business Wire, a unit of Warren Buffett’s Berkshire Hathaway Inc., over a five-year period, according to prosecutors. The group allegedly made more than $100 million in trades using unreleased earnings releases of companies such as Panera Bread Co., Boeing Co., Caterpillar Inc. and Oracle Corp., through retail brokerage accounts.
This story is still developing.