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Man pleads guilty in newswire hack scheme

Man pleads guilty in newswire hack scheme
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A Ukrainian hacker has pleaded guilty to participating in a scheme to hack into three business newswires, steal unpublished press releases and use the information to make illegal trades.

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The scheme — which resulted in the theft of more than 150,000 press releases from publicly traded companies — netted approximately $30 million in illegal profits, the Justice Department said Tuesday.

Vadym Iermolovych, 28, of Kiev, Ukraine, pleaded guilty to conspiracy to commit wire fraud, conspiracy to commit computer hacking and aggravated identity theft.

Iermolovych admitted to hacking into PR Newswire Association’s network in 2013, using a set of stolen user credentials.

He also admitted that he sold press releases stolen from Marketwired — hacked into by co-conspirators — and purchased access into Business Wire’s network, all in furtherance of a larger conspiracy to profit from the stolen draft press releases.

Nine other hackers and securities traders implicated in the case have been indicted on criminal charges.

The Securities and Exchange Commission (SEC) has charged 32 people in the scheme, including two Ukrainian men who are accused of hacking the newswire services before feeding the information to at least 30 other people inside and outside the U.S.

“This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and profits generated,” SEC Chairwoman Mary Jo White said in August.

The two ringleaders — Ivan Turchynov and Oleksandr Ieremenko — developed a “secret web-based location” to send the purloined information to traders in numerous countries, including Russia, France and the U.S., the SEC said.

Those traders would then swiftly arrange trades to capitalize on the brief window — sometimes as short as 36 minutes — before the information was published.

They would move stocks, options and other securities, according to the SEC, sometimes giving a kickback to the original hackers. A few traders even gave the Ukrainian duo direct access to their brokerage accounts.

The windfalls could be huge. In that brief 36-minute window, traders rapidly began selling short on one particular stock, netting over half a million dollars in profit, the SEC said.

Traders could even create “shopping lists” or “wish lists” for the hackers, listing desired upcoming press releases for publicly traded companies.

“This cyber hacking scheme is one of the most intricate and sophisticated trading rings that we have ever seen, spanning the globe and involving dozens of individuals and entities,” Andrew Ceresney, who heads the SEC’s Division of Enforcement, said when the charges were announced.