Traders Who Allegedly Profited from Hacked News Releases Settle With SEC for $30 Million

SEC Enforcement Privacy/Cyber Risk & Data Security

On September 14, the SEC announced that it had reached a $30 million settlement with two defendants who allegedly profited from trading based on information hacked from newswire services. The settlement stems from an SEC complaint filed in August against 34 defendants for their alleged involvement in an international scheme that generated over $100 million in illegal profits over a five-year period. According to the SEC charges, defendants hacked into newswire services and transmitted stolen data to a network of international traders. The SEC claims that the parties to the settlement made $25 million in illicit profits by buying and selling contracts-for-differences (CFDs) based on hacked press release information they received from other defendants. In the proposed settlement offer, which requires court approval, the two defendants neither admit nor deny the SEC’s allegations, but agree to be enjoined from violating U.S. and SEC securities antifraud provisions, and to return $30 million in alleged illegal profits. The Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit stated that the discovery and prosecution of the scheme “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,” and demonstrates the SEC’s “ability to police this opaque market.” The SEC’s case against the remaining 32 defendants remains pending.