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Security and Risk Online - U.S. accuses Chinese citizens of hacking law firms, insider trading

 

Three Chinese citizens have been criminally charged in the United States with trading on confidential corporate information obtained by hacking into networks and servers of law firms working on mergers, U.S. prosecutors said on Tuesday.

 

Iat Hong of Macau, Bo Zheng of Changsha, China, and Chin Hung of Macau were charged in an indictment filed in Manhattan federal court with conspiracy, insider trading, wire fraud and computer intrusion.

 

Prosecutors said the men made more than $4 million by placing trades in at least five company stocks based on inside information from unnamed law firms, including about deals involving Intel Corp and Pitney Bowes Inc.

 

The men listed themselves in brokerage records as working at information technology companies, the U.S. Securities and Exchange Commission said in a related civil lawsuit.

 

Hong, 26, was arrested on Sunday in Hong Kong, while Hung, 50, and Zheng, 30, are not in custody, prosecutors said. Defense lawyers could not be immediately identified.

 

The case is the latest U.S. insider trading prosecution to involve hacking, and follows warnings by U.S. officials that law firms could become prime targets for hackers.

 

"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 valuable to would-be criminals," U.S. Attorney Preet Bharara in Manhattan said.


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