The U.S. attorney for the Eastern district of New York, Robert Capers, announced on Tuesday that a Georgia man, Leonid Momotok, pleaded guilty to conspiracy to commit wire fraud for his role in a scheme to hack into three newswires and steal non-public financial information from forthcoming press releases. U.S. authorities say that trading on that information generated approximately US$30 million in illegal profits.
The guilty plea was entered in federal court in Brooklyn, N.Y. on Tuesday. Momotok, who has yet to be sentenced, is facing jail time as well as monetary sanctions, including restitution, criminal forfeiture and a fine.
“Using non-public press releases stolen by overseas hackers, Momotok and his group of traders engaged in a brazen scheme that was unprecedented in its scope, impact and sophistication,” Capers says in a statement.
According to court filings and facts presented at the plea hearing, between February 2010 and August 2015, hackers based in Ukraine gained unauthorized access into the computer networks of Marketwired LP, PR Newswire Association LLC (PRN), and Business Wire to steal information such as forthcoming earnings announcements.
The information was then shared with traders through overseas servers, and they used it to trade ahead of the press releases. The traders then funnelled a portion of the illegal proceeds to the hackers through foreign shell companies.
Diego Rodriguez, assistant director-in-charge of the FBI’s New York office, says in a statement that the scheme represents “one of the most sophisticated insider trading cases we’ve seen to-date.”