The Securities and Exchange Commission has charged five Russian nationals with a multi-year scheme to profit from stolen corporate earnings announcements.
Profit of $82 Million from 500 Hacked Corporate Earnings Announcements
These announcements were obtained by hacking into the systems of two U.S.-based filing agent companies before being made public.
Filing agents assist publicly traded companies with the preparation and filing of periodic reports with the SEC, including quarterly reports containing earnings information.
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.
The scheme lasted for two years, from 2018 through 2020, the SEC alleged. The complaint states the traders used 20 different brokerage accounts located in Denmark, the United Kingdom, Cyprus, and Portugal.
The trades generated profits of at least $82 million using the stolen information of more than 500 corporate earnings announcements.
Highly Sophisticated and Deceptive Scheme
A portion of their enormous profits were shared with a Russian information technology company founded by Kliushin and for which Yermakov and Rumiantcev serve as directors.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, commented: “With this action, the SEC, using its powerful analytical tools, has exposed a highly sophisticated and deceptive scheme to steal and monetize non-public corporate information. While we remain steadfast in our commitment to protect the integrity of our securities markets against bad actors no matter where they are located or what sophisticated tactics they use, we strongly encourage companies to shore up their safeguards against, and remain vigilant for cyber breaches that compromise their non-public information.”
The SEC charged the five defendants with violating the antifraud provisions of the federal securities laws and related SEC antifraud rules. Vladislav Kliushin was extradited from Switzerland.
Vladislav Klyushin, 41, of Moscow, Russia, was charged with conspiring to obtain unauthorized access to computers, and to commit wire fraud and securities fraud, and with obtaining unauthorized access to computers, wire fraud and securities fraud.
Ivan Ermakov, Nikolai Rumiantcev, Mikhail Vladimirovich Irzak, and Igor Sergeevich Sladkov remain at large.
Ermakov was also charged in federal court in Pittsburgh in connection with his alleged role in hacking and related disinformation operations targeting international anti-doping agencies, sporting federations, and anti-doping officials.
Ermakov, a former officer in the Russian Main Intelligence Directorate (GRU), a military intelligence agency of the General Staff of the Armed Forces of the Russian Federation, was previously charged in July 2018 in federal court in Washington, D.C. for his alleged role in a hacking and influence effort related to the 2016 U.S. elections.
In October 2018, Ermakov was also charged in federal court in Pittsburgh in connection with his alleged role in hacking and related disinformation operations targeting international anti-doping agencies, sporting federations, and anti-doping officials.