Chinese hackers breached a string of Wall Street law firms and stole data that led to $4m of illicit profits from trading on insider information, according to the US government, which said the case should act as “a wake-up call” to advisers around the world.
On Tuesday Preet Bharara, the US attorney for the southern district of New York, unsealed criminal charges against three individuals who it said infiltrated law firms by hacking in to networks and servers. Once inside, the trio targeted the email accounts of senior partners who worked on high-profile mergers and acquisitions — and then bought stock in at least five publicly traded companies before deals were announced.
The action is the latest in a series of cases of “outsider trading”, which watchdogs see as an increasingly serious threat to securities markets. Unlike classic insider trading, where senior executives trade stock based on material, non-public information learned at the office, outsider traders typically have no connection to the company concerned and do not owe a fiduciary duty to anyone.