Chi­nese Trio Charged With In­sider Trad­ing From Hacked In­for­ma­tion

Trillions - - From The Publisher -

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.

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