Newark, N.J. • An international web of hackers and traders made $100 million on Wall Street by stealing a look at corporate news releases before they went out, then trading on that information ahead of the pack, federal authorities charged Tuesday.
Authorities said it was the biggest scheme of its kind ever prosecuted, and one that demonstrated another alarming vulnerability in the financial system in this age of increasingly sophisticated cybercrime.
In a 21st-century twist on insider trading, the hackers broke into the computers of some of the biggest business newswire services, which put out earnings announcements and other press releases for a multitude of corporations.
Nine people in the U.S. and Ukraine were indicted on federal criminal charges, including securities fraud, computer fraud and conspiracy. And the Securities and Exchange Commission brought civil charges against the nine plus 23 other people and companies in the U.S. and Europe.
The nine indicted include two people described as Ukrainian computer hackers and six stock traders. Prosecutors said the defendants made $30 million from their part of the scheme.
Authorities said that beginning in 2010 and continuing as recently as May, the hackers gained access to more than 150,000 press releases that were about to be issued by Marketwired of Toronto; PR Newswire in New York; and Business Wire of San Francisco. The press releases contained earnings figures and other corporate information.
The defendants then used roughly 800 of those news releases to make trades before the information came out, exploiting a time gap ranging from hours to three days, prosecutors said.
A strong earnings report can cause a company's stock to rise, while disappointing news can make it fall.
The conspirators typically used the advance information to buy stock options, which are essentially a bet on the direction a stock will move.
United States Secretary of Homeland Security Jeh Johnson, right, speaks during a news conference in Newark, N.J., Tuesday, Aug. 11, 2015. An international group of hackers and stock traders made $30 million by breaking into the computers of newswire services that put out corporate press releases and trading on the information before it was made public, federal prosecutors said Tuesday. (AP Photo/Seth Wenig)
United States Secretary of Homeland Security Jeh Johnson, center, speaks during a news conference in Newark, N.J., Tuesday, Aug. 11, 2015. An international group of hackers and stock traders made $30 million by breaking into the computers of newswire services that put out corporate press releases and trading on the information before it was made public, federal prosecutors said Tuesday. (AP Photo/Seth Wenig)
U.S. Secret Service Director Joseph Clancy speaks during a news conference in Newark, N.J., Tuesday, Aug. 11, 2015. An international group of hackers and stock traders made $30 million by breaking into the computers of newswire services that put out corporate press releases and trading on the information before it was made public, federal prosecutors said Tuesday. (AP Photo/Seth Wenig)
Commissioner of the U.S. Security Exchange Commission Mary Jo White speaks during a news conference in Newark, N.J., Tuesday, Aug. 11, 2015. An international group of hackers and stock traders made $30 million by breaking into the computers of newswire services that put out corporate press releases and trading on the information before it was made public, federal prosecutors said Tuesday. (AP Photo/Seth Wenig)
United States Secretary of Homeland Security Jeh Johnson, center, speaks during a news conference in Newark, N.J., Tuesday, Aug. 11, 2015. An international group of hackers and stock traders made $30 million by breaking into the computers of newswire services that put out corporate press releases and trading on the information before it was made public, federal prosecutors said Tuesday. (AP Photo/Seth Wenig)
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