Federal charges for insider trading / hacker team

Posted By Galluzzo & Arnone || 11-Aug-2015

Two indictments were unsealed today in federal court in New Jersey and Brooklyn charging nine individuals with having participated in a unique scheme to profit illegally from stolen insider information. Many of the defendants have connections to the Ukraine, and their names are Vitaly Korchevsky, Vladislav Khalupsky, Leonid Momotok, Alexander Garkusha (Brooklyn) and Ivan Turchynov, Oleksander Ieremenko, Arkadiy Dubovoy, Igor Dubovoy, and Pavel Dubovoy (New Jersey).

In short, it is alleged that this conspiracy included skillful computer hackers and securities traders working together to steal valuable information and then use it to their advantage. More specifically, the alleged computer hackers used brute force attacks and a variety of other computer hacking techniques (such as SQL injections) to access confidential press releases containing financial data for publicly-traded companies prior to the information being made available to the public. Knowledgeable broker-dealers on the team then allegedly used the non-public information to make advantageous “insider” trades ahead of the market during the brief windows of time between the press releases being written and being released to the public. All in all, it is estimated that they were collectively able to profit illegally to the tune of $30 million.

A press release from the federal prosecutors handling the matter is available here. The charges generally include securities fraud, wire fraud, securities fraud conspiracy, and money laundering. (18 U.S.C. § 1349; 18 u.s.c. § 1343; 15 U.S.C. §§ 78j(b) & 78ff, and 17 C.F.R. § 240. lOb-5; 18 u.s.c. § 371; 18 u.s.c. § 1030; 18 U.S.C. § 1028A(a)(l); 18 U.S.C. § l 956(h); and 18 U.S.C. § 2). Copies of the indictments are accessible here and here via PACER.

If you or a loved one have been charged with federal computer hacking or insider trading charges, you should strongly consider contacting the experienced criminal defense attorneys at Galluzzo & Arnone LLP. Their team of former prosecutors has experience defending cyber crimes and routinely represent broker-dealers in a wide variety of criminal cases.

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