A Ukranian investment company and its CEO are going to pay the US government $30m for trading on info swiped from press releases before they were made public.
The US Securities and Exchange Commission (SEC) said Jaspen Capital Partners Ltd and CEO Andriy Supranonok illegally profited from investments made based on stolen press releases.
The SEC said Jaspen was among a group of investors who conspired to steal unreleased articles from a pair of newswire services in order to obtain tips for investments. The group was able to hack two newswire services and obtain information over a five-year period ranging from 2010–2014.
Armed with the insider information, the investors then purchased contracts-for-differences (CFD) derivatives for companies based on the stolen news information.
Last month, the SEC filed suit against 32 people involved in the scheme and sought to get back roughly $100m in illegally-made profits.
Under the terms of the settlement, which include no admission of guilt or wrongdoing, Jaspen and Suprananok will pay the SEC $30m in money made from the investment scheme. The case will continue against the remaining investors named in the SEC complaint [PDF].
According to the SEC, two Ukranian hackers compromised the wire services and then fed the stolen information to dozens of investors who made illegal (and highly lucrative) trades. The defendants are accused of violating the US Securities Act and the US Exchange Act.
"This case should serve as a shot across the bow of any trader who thinks that CFDs traded outside the United States can be used to mask their unlawful conduct," said SEC enforcement division complex financial instruments unit chief Michael J. Osnato.
"The SEC's use of sophisticated analytical tools to identify abusive CFD trading like this demonstrates our ability to police this opaque market."
The SEC filed its complaint in New Jersey, where one of the hacked newswire services kept their servers and where the Nasdaq servers used to perform the transactions were located. The defendants in the case include both US residents and people living abroad in Russia, Malta, France, the UK, and Cyprus. ®