Three Chinese citizens have been accused of hacking the networks of U.S.-based international law firms and using information from those firms to conduct insider trading, making more than $4 million from the scheme.
In a statement, U.S. Attorney Preet Bharara said the hackers targeted around seven firms involved in acquiring, or being acquired by, other companies.
Prosecutors said that beginning in April 2014, the trio obtained inside information by hacking two U.S. law firms and targeting the email accounts of partners at the firms who worked on high-profile mergers and acquisitions.
|(Preet Bharara/ pc-Google Images)|
“This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals,” said Preet Bharara in a US Department of Justice release.
According to the U.S. Securities and Exchange Commission, the three men posed as IT professionals, listing themselves as such in brokerage records.
One of the accused, Iat Hong, a resident of Macau, was arrested by local authorities on Dec. 25 and is awaiting extradition proceedings. Thirteen charges are being levelled against the alleged hackers Hong, Bo Zheng, and Chin Hung — including computer intrusion and insider trading.
The U.S. government is seeking the extradition of Hong, prosecutors said. Hung, 50, and Zheng, 30, are not in custody, authorities said.
The attacks, which occurred in 2014 and 2015, targeted the email accounts and data of law-firm partners, aiming to gain sensitive information about the acquisitions.
In a case, the group allegedly compromised a law firm that was advising a company contemplating purchasing Intermune, a U.S.-based drug maker. After stealing 40 gigabytes of data from the law firm, the three men began purchasing Intermune shares. After the company announced it would be purchased by Roche AG on Aug. 25, 2014, the men sold the 18,000 shares for a profit of $380,000, according to the U.S. Attorney’s statement.