[BreachExchange] Feds Say 3 Hacked Law Firms' Networks, Made Insider Trades

[Audrey McNeil]

http://abcnews.go.com/International/wireStory/feds-
hacked-law-firms-networks-made-insider-trades-44418345

Federal prosecutors have charged three Chinese nationals accused of
profiting from insider information about mergers and acquisitions by
hacking into the networks of law firms working on the deals, authorities
said Tuesday.

The three men made more than $4 million in profits by buying stock in
companies that were about to be acquired and then selling the shares after
the acquisitions were announced, U.S. Attorney Preet Bharara said.

Prosecutors say the trio got the insider information between April 2014 and
late 2015 by hacking into the email systems of multiple international law
firms with offices in New York.

One defendant, Iat Hong, was arrested Monday in Hong Kong and is awaiting
extradition. Two others, Bo Zheng and Chin Hung, have not been arrested.

All three are being charged with multiple securities fraud, insider
trading, computer intrusion and other offenses. They face up to 20 years in
prison if convicted of the most serious charges.

"This case of cyber meets securities fraud should serve as a wake-up call
for law firms around the world: You are and will be targets of cyber
hacking, because you have information available to would-be criminals,"
Bharara said in a statement.

FBI Assistant Director William F. Sweeney Jr. said the bureau "works around
the clock to keep these types of alleged securities fraudsters and cyber
criminals from trading on stolen information."

Information about defense attorneys for the defendants wasn't immediately
available.

The defendants profited from deals including the acquisition of e-commerce
company Borderfree by Pitney Bowes Inc. and Intel Corp.'s acquisition of
circuit manufacturer Altera Corp., according to the indictment. Both were
completed in 2015.

Prosecutors say Hong and Hung used insider information to buy 113,000
shares of Borderfree in the week before the Pitney Bowes-Borderfree
transaction was made public on May 6, 2015.

They earned a profit of approximately $841,000 when they sold their
Borderfree shares on May 18, 2015.

The law firms that worked on the deals and allegedly targeted aren't named
in the indictment.
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