Feds bust Chinese hackers for trading on stolen law firm secrets

One billion Yahoo accounts hacked

Chinese hackers made more than $4 million by infiltrating the email servers of fresh York law firms to steal secret corporate merger plans they could trade on, according to U.S. authorities.

Prosecutors unsealed insider trading in addition to hacking charges on Tuesday against three Chinese suspects allegedly involved inside scheme.

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Authorities said one of the individuals, Iat Hong a 26-year-old Macau resident, was arrested on Sunday in Hong Kong in addition to faces extradition to the U.S. The various other two defendants, Bo Zheng in addition to Chin Hung, were hit with 13-count indictments in addition to remain at large.

All three were also charged by the SEC, once the agency has charged individuals for hacking into a law firm’s computer network.

According to the indictment, the suspects hacked inside information by infiltrating at least two unnamed law firms between April 2014 in addition to late 2015.

The hackers scoured the emails of law firm partners to discover stocks which were likely to soar because they were targeted in merger deals, including one tech company Intel would likely later acquire for $17 billion. The defendants then purchased shares of those companies, scoring over $4 million in illegal profits, authorities allege.

Related: Drugs, prostitutes used to bribe pension fund manager

Preet Bharara, the U.S. Attorney for the Southern District of fresh York, said the case should serve as a “wake-up call for law firms around the entire world.”

“You are in addition to will be targets of cyber hacking, because you have information valuable to would likely-be criminals,” Bharara said in a statement.

The SEC can be seeking an asset freeze to prevent Hong, Zheng in addition to Hung by cashing in their illegal gains. The SEC named Hong’s mother as a relief defendant to try to recover ill-gotten gains in her accounts linked to the insider trading.

The allegations are the latest apparent evidence of an intersection between cyber crime in addition to insider trading. Earlier which month, a former Expedia (EXPE) which professional admitted to illegally trading on secrets he discovered by hacking his own company’s senior executives. The insider trading scored him $331,000, according to prosecutors.

Authorities did not identify which law firms were victimized by the Chinese hackers. Federal prosecutors described them as “prominent U.S.-based international law firms with offices in fresh York.”

The indictment cited one incident in which Hong, Zheng in addition to Hung allegedly hacked into a law firm which was hired in January 2015 by Intel (INTC, Tech30) to help which devise a takeover of rival chip maker Altera.

The trio stole nearly three gigabytes of confidential data, including secret emails which contained the proposed takeover cost inside Altera deal, authorities allege. Beginning in February 2015, Hong, Zheng in addition to Hung purchased more than 210,000 Altera shares.

Altera’s stock cost spiked 26% after news of the confidential merger talks seeped out inside financial press. The defendants sold all of their Altera stock several weeks later for a profit of about $1.4 million, the indictment said.

Related: Expedia which guy made $300,000 by hacking own execs

The SEC said the Chinese hackers were caught using “enhanced trading surveillance in addition to analysis capabilities” developed by the agency inside past few years.

Hong, Zheng in addition to Hung also allegedly hacked to steal secrets to benefit their robot start-up. Prosecutors said between April 2014 in addition to late 2015, the trio stole proprietary information by two unnamed robotics companies on the technology in addition to design of consumer robotic products, including design schematics.

sy88pgw (fresh York) First published December 27, 2016: 1:52 PM ET


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Feds bust Chinese hackers for trading on stolen law firm secrets

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