SEC has $30M settlement in insider trading case involving business newswires
2 traders in Ukraine hand over money after accounts frozen in civil case
The Securities and Exchange Commission has announced it has reached a $30-million US settlement with international traders who benefited from insider information hacked from business newswires.
The $30 million settles SEC allegations against Ukrainian-based Jaspen Capital Partners Ltd. and its CEO Andriy Supranonok, who were among 34 defendants facing civil charges from the U.S. regulator.
A New Jersey court filing in August alleged the group conspired to hack into Business Wire and P.R. Newswire Association in the U.S. and Marketwired, which has locations in Canada and the U.S. All are services that provide business news.
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They stole confidential press releases that had not yet been released over a five-year period and were able to make trades based on the information that resulted in more than $100 million in illicit profits, according to the indictment.
The SEC said it was able to freeze the assets of the traders involved. It estimated Jaspen and Supranonok made about $25 million on trades in the scheme.
"Barely a month after we froze tens of millions of dollars in illegal profits from the defendants' trading on illegal inside information obtained from hacked news releases, we obtained a settlement with foreign traders that deprives them of their wrongful gains," said Andrew Ceresney, director of the SEC's enforcement division.
Ceresney said the case shows that traders acting outside the U.S. can still be called to account by the regulator. The SEC worked with the U.S. Secret Service and international partners to track the money.
Jaspen and Supranonok have neither admitted or denied the allegations against them, but if the deal gains court approval, it will result in antifraud charges being dropped against them.
Another nine traders, plus the hackers who gained access to the insider information, are facing criminal charges in the same case.
The SEC is still pursuing cases against another 32 defendants.