Federal Court Charges Three Chinese Hackers In Insider Trading Fiasco

US charges 3 Chinese citizens of hacking law firms to facilitate insider trading

Federal Court Charges Three Chinese Hackers In Insider Trading Fiasco

Additional cyber hacking of law firms' data yielded secret information that allegedly enabled the suspects to ring up roughly $841,000 in illegal profits from the $395 million deal announced in May 2015 by Stamford, Ct. -based technology company Pitney Bowes (PBI) and Borderfree, a market leader in e-commerce solutions.

They allegedly used the information they stole to purchase the shares of three companies ahead of public announcements that those companies had entered into agreements to merge.

Thirteen charges are being levelled against the alleged hackers Hong, Bo Zheng, and Chin Hung - including computer intrusion and insider trading. The SEC said it is also attempting to freeze the men's assets to prevent them from cashing out prior to being potentially extradited and tried in the U.S.

The SEC said this marks the first time the agency has issued charges for hacking into a law firm's computer networks.

U.S. authorities reportedly claim that the suspected hackers compromised the unnamed law firms' networks and servers by deploying malware and accessed classified information pertaining to various acquisition deals.

Lawyers for the defendants, who also face a related civil lawsuit by the U.S. Securities and Exchange Commission, could not be immediately determined. In addition, law firms are one of the most widely-used third party service providers across the world.

The hackers then bought shares of companies that would later be acquired, winning big profits.

"As alleged, the defendants - including Iat Hong, who was arrested in Hong Kong on Christmas Day - targeted several major NY law firms, specifically looking for inside information about pending mergers and acquisitions".

Meanwhile, the Prosecutors did not identify the two law firms, or five others they said the three Chinese men allegedly targeted. The trio are alleged to have targeted the email accounts of individual law firm partners. The law firms, which the agency described as "prominent", were not named. Beginning in February 2015, Hong, Zheng and Hung purchased more than 210,000 Altera shares. The defendants sold all of their Altera stock several weeks later for a profit of about $1.4 million, the indictment said.

"The defendants targeted at least seven law firms as well as other entities in an effort to unlawfully obtain valuable confidential and proprietary information", stated a US Department of Justice release.

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