Device Companies Fall Prey to International Hackers
Edwards Life Sciences and San Jose, Calif.-based Align Technology, which markets the Invisalign clear braces system, were among companies caught up in a cyberplot to gain profits from stolen earnings announcements.
In a civil complaint filed Aug. 10 in the U.S. District Court for the District of New Jersey, the U.S. Securities and Exchange Commission accuses 32 defendants – both individuals and corporate entities, many with Ukrainian ties – of using stolen nonpublic information for illegal profit.
The complaint alleges that over a five-year period, Ivan Turchynov and Oleksandr Ieremenko hacked into the networks of Marketwired, PR Newswire Association and Business Wire to steal press releases detailing companies’ quarterly and annual earnings data before they appeared online. The hackers then sold the releases to traders who used the information to their financial advantage.
One group of traders named in the action — consisting primarily of the family, friends and associates of Arkadiy Dubovoy, a businessman living in Alpharetta, Ga. — took in more than $31 million.
The second group consists of foreign traders, many with ties to Russia.
According the U.S. Attorney’s Office for the District of New Jersey, the traders had “wish-lists” of companies for the hackers to target.
“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,” says SEC Chair Mary Jo White.
She adds the hackers and traders reaped more than $100 million in illicit profits, and their assets have been frozen.
Caught in the Crossfire
According to the complaint, the defendants stole a 2013 earnings release for Edwards, allowing traders to rake in more than $4 million in illicit profits. The ill-gotten gains from Align also come to $4 million.
If the court determines the defendants violated federal securities laws, they could be ordered to pay penalties and return any fraudulently obtained gains with prejudgment interest.
In a parallel action, authorities with the U.S. Attorney’s Office for the District of New Jersey and the U.S. Attorney’s Office for the Eastern District of New York have filed criminal charges against several of the defendants identified by the SEC, including Turchynov and Ieremenko and members of the Dubovoy trading group.