New charges have emerged from a 2015 case of hacking and insider trading, the SEC announced today. In the previous case, Ivan Turchynov and Oleksandr Ieremenko hacked newswire services and provided information to traders before anyone else could get it. The scheme was very profitable. In one incident, a trader using the information made over $2 million by shorting a stock that was to receive bad news the next day, Dendreon Pharmaceuticals.
From Newswires to Government Databases
A total of 32 people went down in the newswire fraud case. The majority traded on the information. But now the SEC is charging that the individuals went further than previously announced. From a press release this morning:
Ukrainian hacker Oleksandr Ieremenko turned his attention to EDGAR and, using deceptive hacking techniques, gained access in 2016. Ieremenko extracted EDGAR files containing nonpublic earnings results. 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. 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.
EDGAR stands for “Electronic Data Gathering, Analysis, and Retrieval” system. Most public companies doing business in the US use EDGAR to file information with the SEC. Information that can be very useful to traders, such as bad quarters or other potentially damaging information, as well as positive information. Above all, traders understand that the market responds to company performance. Citigroup’s stock declined by almost $20 over the course of 2018 after posting a huge loss at the end of 2017.