SEC Charges Five Russians Involved in $82M Hacking and Trading Scheme

The US Securities and Exchange Commission (SEC) announced on Monday that it has filed fraud charges against five Russian nationals for their engagement in a multi-year scheme to profit from stolen corporate earnings announcements obtained by hacking into the systems of two U.S.-based filing agent companies before the announcements were made public.

The filing agents assist publicly traded companies with the preparation and filing of periodic reports with the SEC, including quarterly reports containing earnings information.

The SEC's Complaint alleges that defendant Ivan Yermakov used deceptive hacking techniques to access the filing agents' systems and directly or indirectly provided not-yet-public corporate earnings announcements stolen from those systems to his co-defendants Vladislav Kliushin, Nikolai Rumiantcev, Mikhail Irzak, and Igor Sladkov. 

SEC found that between 2018 and 2020, the traders used 20 different brokerage accounts located in Denmark, the United Kingdom, Cyprus and Portugal to generate profits of at least $82 million using the stolen information to make trades before over 500 corporate earnings announcements. The defendants allegedly shared a portion of their enormous profits by funneling them through a Russian information technology company founded by Kliushin and for which Yermakov and Rumiantcev serve as directors.

Relevant department has announced criminal charges against the five defendants named in the SEC's action and that defendant Vladislav Kliushin was extradited from Switzerland.

Specifically, the SEC's complaint charges each of the defendants with violating the antifraud provisions of the federal securities laws and related SEC antifraud rules, and seeks a final judgment ordering the defendants to pay penalties, return their ill-gotten gains with prejudgment interest, and enjoining them from committing future violations of the antifraud laws. 

Earlier this month, Fazzaco reported that SEC has filed on November 30, 2021, insider trading charges against Marc Demane Debih​, a Swiss national, who generated at least $49 million in illicit profits in connection with his active participation in two multi-year insider trading schemes.