Intriguing to find out how they cottoned on to this - I would guess that the most probable answer is that the perps raised their heads on other activities related to insider trading?
Trio charged with $4m insider trading by hacking merger lawyers
US prosecutors have charged three Chinese men with making more than $4m (£3.2m) by allegedly trading on information obtained from hacking top merger and acquisition law firms. The defendants are charged with targeting at least seven top international law firms with offices in New York, which advised companies on corporate …
COMMENTS
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Wednesday 28th December 2016 13:46 GMT Version 1.0
Re: Small sample
Greed usually trumps competence and the temptation, having gotten away with it once, is to try it again. I would assume that the SEC gets a daily list of suspicious trades - trades that are profitable, trades that spread the takeover period, and trades are executed by a connected group of people that have shown an ability to make multiple trades under these circumstances. Add into this that there appears to be a common group of lawyers involved with the trades - the SEC probably started looking for an inside trader in the lawyers.
What I find puzzling is the relatively small amount of money involved in this bust ... If someone in the firms noticed that hackers were in the system then this would be a good time to execute some trades at a distance with the certainty that if suspicious trades were discovered, then the SEC could be directed to look elsewhere. $4m isn't really enough to get the SEC's attention.
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Wednesday 28th December 2016 14:59 GMT BillG
@Version 1.0 wrote: Mr BebopWeBop, they have a saying in Chicago: "Once is happenstance. Twice is coincidence. The third time it's enemy action."
I like that, it's a variation of the "three strikes you're out" rule.
This is a similar saying about if a girl blows you off: "The first time she's forgetful, second's accidental, but three means it's all intentional".
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Wednesday 28th December 2016 12:14 GMT Version 1.0
Rank amateurs
$4m wouldn't even pay the Christmas bonus for one executive at Goldman Sachs. Of course it's a lot easier to crack down on johnny china-man than political party donors. If they have political connections then we can expect them to pay a small fine and the case dismissed without admission of guilt.
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Wednesday 28th December 2016 12:51 GMT John Brown (no body)
Re: Lawyers lose small change behind the sofa
The lawyers lost not a penny. If anyone lost anything, it was the people who chose to sell just before the mergers were announced. They'd almost certainly have been selling anyway. This is probably a textbook case of "victimless" crime. Not that it's right of course and they deserve whatever they get if found guilty. I supposes the hackers might have offered a little over the odds for the shares to entice a sale, but no one actually "stole" money in the normal sense.
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Wednesday 28th December 2016 14:51 GMT Anonymous Coward
Re: Lawyers lose small change behind the sofa
Also how is it insider trading. They were not 'insiders' they obtained information that lead them to want to buy shares in a company. That information may have been obtained illegally, but I don't see how its insider trading. Is it considered insider trading if im out and overhear someone saying this company is just about to be bought, I then think hey, i should buy some shares in that company. If it is, then that is completely idiotic. If a merger or take over is leaked and the papers release that info, is whom ever buys stock now insider traders?
An insider trader is someone who is in a privileged position, and uses that position to gain advantage over others. These 'hackers' were not in a privileged position. They used their skills, not related to the company or trading, to obtain information which they used. The way they got that information is illegal, not how they used that information.
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Wednesday 28th December 2016 15:16 GMT Anonymous Coward
Re: Lawyers lose small change behind the sofa
The way they got that information is illegal, not how they used that information.
I think you'll find it is both in most major economies, although the niceties of the actual offence of using the information does vary.
In the US it certainly is illegal to trade on the basis of non-public information, whether the trader or beneficiary is themselves an "insider" to the companies concerned or not. Across the EU it is illegal under the terms of the Market Abuse Regulation, and the definition uses the term "inside information" as well as "insider". You don't have to be an insider yourself to be illegally using inside information.
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Wednesday 28th December 2016 16:07 GMT Stevie
Re: Lawyers lose small change behind the sofa
"Also how is it insider trading. They were not 'insiders' they obtained information that lead them to want to buy shares in a company."
They traded using non-public information. That is the definition of insider trading. It doesn't matter how you get the information, if you act on it, even if you lose money, you are an insider trader and breaking the law in the USA.
" These 'hackers' were not in a privileged position."
Yes they were. They had information Joe and Jane Shmoe did not have and used it to gain an advantage over them. That is pretty much the definition of being in a privileged position as far as stock trading is concerned in the USA.
"The way they got that information is illegal, not how they used that information."
Actually, both are illegal in the USA, as I have explained. It is generally all about intent when it comes to Federal Law. The intent here is pretty bloody clear to anyone. Break into someone else's computer (illegal, and well-known to be illegal after numerous very public prosecutions concerning same so intent can be inferred to a high degree of confidence) and trade in stocks based on that stolen private information (again, the intent to trade stocks based on the information stolen is pretty easy to infer on account of it being exactly what they did).
Just because we have domestic criminals at the corporate level who are gusty of much worse abuses doesn't mean everyone working at a lower reward expectation level gets a free pass, and this might just put the fear of the FTC in those other buggers for a bit.
Heads on pikes please.
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Wednesday 28th December 2016 18:44 GMT Yet Another Anonymous coward
Re: Lawyers lose small change behind the sofa
>They traded using non-public information. That is the definition of insider trading.
is it? If you overhear a conversation in a lift and trade on it that famously isn't insider trading.
It is apparently a favorite game of nerds visiting law offices to chat loudly about imagined take-overs of their company by Google or Facebook whenever suits might be around
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Wednesday 28th December 2016 19:07 GMT Anonymous Coward
Re: Lawyers lose small change behind the sofa
is it? If you overhear a conversation in a lift and trade on it that famously isn't insider trading.
Strawman!
A better example would be to intentionally get in the lift with a selected M&A lawyer, and pick his pockets to get any inside info. And that would certainly qualify for an insider dealing rap in any civilised part of the world.
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Monday 2nd January 2017 21:07 GMT VanguardG
Re: Lawyers lose small change behind the sofa
While its true that your (somewhat contrived) scenario would not result in insider trading, neither is it likely to happen...if there is an M&A agreement, anyone with real knowledge signs non-disclosure agreements that spell out severe financial penalties if the proverbial feline is released from the cloth enclosure prematurely, so nobody with true inside knowledge would endanger their personal money by blathering on about such things in public. Yes, one does see the occasional blip story, but its far more likely to be those "nerds" you speak of actually being right once in a while than a legit instance of "in the know" people blabbing about. The NDA is to protect against the partner telling his wife, who tells her best friend, who calls her brother, who calls his friend, who calls 8 more friends who all buy the stock. At SOME point along that chain, one can argue that insider trading doesn't apply anymore - but which point? So, the NDA prohibits any discussion about the arrangements in any setting where there is anyone present who hasn't signed the NDA.
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Wednesday 28th December 2016 21:42 GMT Hans 1
Re: Lawyers lose small change behind the sofa
>The way they got that information is illegal, not how they used that information.
No, the thing is, only a select few are allowed to perform insider trading, the top 1%, anybody else who is not a member of the club gets hung, quartered, and drafted for that.
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Thursday 29th December 2016 18:42 GMT BillG
Re: Lawyers lose small change behind the sofa
No, the thing is, only a select few are allowed to perform insider trading, the top 1%, anybody else who is not a member of the club gets hung, quartered, and drafted for that.
True. The U.S. Congress is exempt from insider trading laws (Nancey Pelosi got caught big time for doing that). Seriously.
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Sunday 1st January 2017 20:29 GMT Tom Paine
Re: Lawyers lose small change behind the sofa
The expression you're searching for is MNPI: "material non-public information". If you work at a bank, legal firm, investment manager or whatever and have access to MNPI, you're committing an offence to trade any instruments affected by it. (IANALATINLA)
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Wednesday 28th December 2016 13:01 GMT Anonymous Coward
Re: Lawyers lose small change behind the sofa
I'm sure the perps will feel the full weight of the law
With the M&A partners being very obvious, very high profile targets for a bit of insider trading, you might hope the law firms themselves would have at the very least a professional obligation to make sure their systems were suitably secure (and hopefully an enforceable legal obligation to the SEC). A whole 20 seconds of searching reveals reports going back to 2011 of hackers targeting law firms for M&A data, so this isn't anything new.
Sadly the list of "Big Law Firms Held to Account" is a very, very short list.
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Sunday 1st January 2017 20:25 GMT Tom Paine
Re: Lawyers lose small change behind the sofa
With the M&A partners being very obvious, very high profile targets for a bit of insider trading, you might hope the law firms themselves would have at the very least a professional obligation to make sure their systems were suitably secure
You might hope, yes. If you haven't worked in the security industry. (See these white hairs? I'm 27*, you know!)
*Not really
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Thursday 29th December 2016 02:32 GMT Nolveys
Naughty, naughty!
Oh you bad, bad, busy, buzzy bees, don't you know that counting cards at The Grand Casino is a no-no? It's particularly inadvisable if you get caught and don't have a VIP membership.
We can only hope that these misguided, misanthropic miscreants use their time behind bars to learn skills that are useful to society. Skills like front-running with high frequency trading, brokering million dollar mortgages to people making minimum wage, purchasing "alternatively attractive" mortgages in bulk and then turning them into tripple-A rated securities or lobbying congress.
I sure hope those silly-billies end up boarding courtesy of Uncle Sam. The good ol' US of A has the finest, most humane and most cost-effective correctional system in the world. Yessir, in the US penal system rehabilitation is job #1 and recidivism is a four letter word.
Yup, everything's going to turn out sunny-side-up. With a little time and elbow grease we will surely gain three outstanding members of society.
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Thursday 29th December 2016 07:29 GMT Anonymous Coward
Re: Naughty, naughty!
I would very much like to know how one can play any casino card game WITHOUT 'counting cards'. Yo see what's in your hand, you see what's on the table, and you estimate the likelyhood of the things you can NOT see by using your brain. How, exactly, is this 'illegal' ?
Equally, lending your money to someone who may not be able to repay you is your business and yours alone. If you want to bundle your outstanding loans and raise more money by selling bits of future earnings on the basis of a share in the debt there is also nothing wrong with it.
It only becomes a problem when you KNOW somethings is wrong and you try to hide it. And even then, it's not really an issue. It DOES become a problem when people that need their fingers to count their toes are blinded by greed and give their money to people they don't know to 'invest' in stuff they don't understand.
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Friday 30th December 2016 07:46 GMT DanielR
"The defendants are charged with targeting at least seven top international law firms with offices in New York, which advised companies on corporate mergers and acquisitions."
That mass spying is working well I see. Can't even allocate money to build up defences it all goes to spying on civilians.
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Tuesday 3rd January 2017 08:53 GMT Potemkine
Presumption of innocence
These guys aren't judged yet, so they should be still be considered as innocent if one believe in basic human rights . Should then their names be published? By pilloring them they are publicly ashamed and may suffer from that, when they are maybe totally innocent and being unfairly named.