SEC brings charges in EDGAR trade hacking case

The US Securities and Exchange Commission (SEC) has charged nine defendants in connection with a scheme to hack into SEC systems and profit from corporate information not yet released to the public.

The defendants, a Ukrainian hacker, six traders in California, Ukraine and Russia, and two entities, allegedly participated in a scheme to hack into the SEC’s EDGAR system and extract non-public information to trade stocks ahead of public announcements that would affect share prices.

The key figure in this case is 27-year-old Ukrainian hacker Oleksandr Ieremenko, who had earlier allegedly hacked newswire services seeking insider information. The SEC says, after the newswire hack, Ieremenko turned his attention to the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR), an online system used by companies listed on stock exchanges to submit quarterly and annual financial results. The filings also include sensitive corporate information on subjects like mergers and acquisitions, which heavily affect a company’s share price.

“The information was passed to individuals who used it to trade in the narrow window between when the files were extracted from SEC systems and when the companies released the information to the public,” the press release states. “In total, the traders traded before at least 157 earnings releases from May to October 2016 and generated at least $4.1 million in illegal profits.”

The SEC says Ieremenko circumvented EDGAR controls that require user authentication, then navigated within the EDGAR system to obtain quarterly earnings not yet public. He allegedly passed the information to different groups of traders which paid him either through regular fees or “by kicking back a portion of their trading profits,” according to the indictment (PDF). The document also says that the hacker’s main attack vector was phishing emails.

According to the complaint, the traders on the receiving end of the hacked EDGAR information are:

• Sungjin Cho, Los Angeles, California

• David Kwon, Los Angeles, California

• Igor Sabodakha, Ukraine

• Victoria Vorochek, Ukraine

• Ivan Olefir, Ukraine

• Andrey Sarafanov, Russia

• Capyield Systems, Ltd. (owned by Olefir)

• Spirit Trade Ltd.

Ieremenko has yet to be detained, according to the documents. He is currently charged with 16 counts of hacking and fraud. The SEC’s investigation is ongoing.

*** This is a Security Bloggers Network syndicated blog from HOTforSecurity authored by Filip Truta. Read the original post at:

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