Chinese Trio Charged With Insider Trading From Hacked Information
Think that your secrets are safe with your lawyer? Think again. again. Law firms are frequent targets of hackers and may law office computers are indeed compromised and confidential information ends up in the hands of criminals.
In the case of Iat Hong, Bo Zheng, and Chin Hung, they hacked into large New York law firms to gain access to information to use for insider trading.
The three are alleged to have targeted at least seven law firms as well as other entities in an effort to unlawfully obtain valuable confidential and proprietary information.
They used the information they obtained to purchase shares in at least three public companies ahead of public announcements about entering into merger agreements. The SEC alleges that they spent approximately $7.5 million in a one-month period buying shares in semiconductor company Altera Inc. in advance of a 2015 report that it was in talks to be acquired by Intel Corporation. Within 12 hours of emails being extracted from one of the firms, Hong and Chin allegedly began purchasing shares of e-commerce company Borderfree so aggressively that they accounted for at least 25 percent of the company's trading volume on certain days in advance of the announcement of a 2015 deal. Hong and Zheng also allegedly traded in advance of a 2014 merger announcement involving Intermune, a pharmaceutical company. Their profits in the trades were more than $4 million.
Iat Hong, a resident of Macau, was arrested in Hong Kong on December 25 and is now awaiting extradition. Hong was presented for an initial appearance on December 26, 2016, before a Judge in Hong Kong and is expected to have his next court appearance on January 16, 2017. The other two suspects remain at large.
Hong's mother is named as a relief defendant in the SEC'S complaint for the purpose of recovering ill-gotten gains in her accounts resulting from her son's illicit trading.