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Published: Thu, December 29, 2016
Economy | By Melissa Porter

Chinese Hackers Charged With Trading on Stolen Law Firm Data

Chinese Hackers Charged With Trading on Stolen Law Firm Data

Chinese traders hacked into the computer systems of US law firms that handle mergers, then used the data for insider trading that generated more than $4 million in illegal profits, federal prosecutors and regulators charged Tuesday.

According to U.S. prosecutors, the Chinese hacking trio raked in over $4m by placing trades in at least five company stocks, presumably using illegally accessed insider information from several undisclosed law firms.

According to SFGate, Ian Hong, Bo Zheng and Hung Chin were accused by the Securities and Exchange Commission and the USA attorney's office for the Southern District of NY for illegal profits from stock trades based on nonpublic information from April 2014 to late 2015. Two of the hackers, Ian Hong and Chin Hung, are based in Macau, Hong Kong, while the third, Bo Zheng, is said to be from Changsha.

Once inside the victims' networks, the hackers scoured computer systems and email accounts for information regarding planned yet unannounced merger and acquisitions information that could then be used to their advantage on the stock market, prosecutors said.

The three alleged hackers are accused of installing malware on two law firm's servers and using their emails as insider information on billion-dollar deals.

He says they got the insider information between April 2014 and late 2015 by hacking into the email systems of global law firms with offices in NY.

In addition to being named in the criminal indictment unsealed Tuesday, all three men were also charged by the Securities and Exchange Commission this week with fraudulently trading on hacked information.

The scheme was carried out using both offshore and United States accounts.

In one deal, the men allegedly learned in the summer of 2014 that an unnamed pharmaceutical company wanted to buy rival InterMune for $67 a share. The trio had a list of eleven partners at the law firm who could provide the most valuable information. "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". They made a whopping $1.4 million trading Altera's stock ahead of the deal becoming public, it is charged. After Intel's acquisition, Altera's share price had jumped by $9, 26 percent more than what they bought it for.

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