Edgar hacking case ends in charges by SEC

(Washington, DC – Insurance News 360) – On Jan. 15, the Securities and Exchange Commission charged nine individuals participating in a previously-disclosed scheme to hack the SEC’s EDGAR system to get non-public information for illegal trading.

Those charged are an Ukranian hacker, six individuals in California, Ukraine, Russia and two entities.

According to the SEC complaint, Ukrainian hacker Oleksandr Ieremenko hacked newswires, then turned his attention to EDGAR and, using deceptive hacking techniques, gained access in 2016. He extracted files containing non-public earnings results and passed the information to individuals who used it to trade before companies released info 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.

“International computer hacking schemes like the one we charged today pose an ever-present risk to organizations that possess valuable information,” said Enforcement Division Co-Director Stephanie Avakian. “Today’s action shows the SEC’s commitment and ability to unravel these schemes and identify the perpetrators even when they operate from outside our borders.”

The SEC’s complaint alleges that the following traders received and traded on the basis of the hacked EDGAR information:

• Sungjin Cho, Los Angeles, California
• David Kwon, Los Angeles, California
• Igor Sabodakha, Ukraine
• Victoria Vorochek, Ukraine
• Ivan Olefir, Ukraine
• Andrey Sarafanov, Russia
• Capyield Systems, Ltd. (owned by Olefir)
• Spirit Trade Ltd.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey also announced related criminal charges.

Source: U.S. Securities and Exchange Commission.

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