A hacker ring of at least nine people extending from the Ukraine to the United States just got busted up and arrested recently — but since its inception in 2010, it allegedly made over $100 million off insider trading of stocks. The remarkably brilliant scheme, like something out of The Sting, went something like this: The hackers broke into a financial news website by using a bruting program — basically an algorithm that shuffles through all possible passwords until it finds the correct one. Pretty basic stuff, so we hear. Once inside, they were able to gain access to all the news stories that hadn’t run yet.
For instance, news organizations get access to news that is embargoed — we can’t tell you until a certain pre-determined time. Like the Streamy’s nominations yesterday, we knew all the nominees well before you did, but we weren’t allowed to disclose the nominations until they were read officially at the announcement ceremony. All of news works like that — including the financial sector.
So major publicly-traded companies would give embargoed releases of big events coming down the pipeline to the financial news service — and the hackers knew about these events well before anyone else who could do something with the news (it would be a jail scenario if the newswire people used their advance knowledge to purchase stock, i.e. insider trading). But the hackers were able to buy large shares of these companies in order to capitalize off the upswing when the rest of the world raced in to buy the stock. The result? Over $100 million of cool ill-gotten fortune before the SEC was finally able to stop them and file charges.
According to CBS News: “Panera Bread sent an announcement about its third quarter earnings to its news distribution service in 2013. CBS News’ Anna Werner reports that investigators say the hackers stole that information and then traded some 75-thousand shares of Panera stock before the news was released to the rest of the world — making $900,000 in an hour and 15 minutes. Prosecutors say the hackers used similar inside information more than 800 times.”
The hackers, you see, were allegedly double-dipping and offering their services and knowledge for sale to the public via a YouTube video, according to the Wall Street Journal. There’s been no word as to whether that was how the hacking ring was first tracked, but it seems like a pretty easy way to get the authorities on your trail.