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How an International Hacker Network Turned Stolen Press Releases into $100M
- mirimir 8y agoI wonder why these people were so careless about keeping their meatspace identities private.
- anonymous5133 8y ago"we won't get caught"
- mirimir 8y agoYeah, I suppose. And probably because "we're in [some former Soviet block country] where we can do as we like, as long as we don't mess with our countrymen".
- deleted 8y ago[deleted]
- ebullientocelot 8y agoMy favorite part is when the Ukrainian officials start their own version of the plot instead of prosecuting. Something to be said about intellectual honesty.
- F3Life 8y agoThis was quite frankly astonishing. Given that so much of our pensions and wealth are tied up in the markets, it's astonishing to hear that every Tom, Dick and Pavel is massively invested in destabilising the whole thing. And these are only the guys who got caught! What about the ones who aren't.
- jstanley 8y agoInsider trading doesn't "destabilise the whole thing", it actually makes the market converge on correct prices more quickly. Some people just don't like it because they don't think it's fair.
- VBprogrammer 8y agoCan you elaborate on what you'd consider fair? Or do you think it would be acceptable to allow trading on inside information in the current system? The only fair system I can imagine (fairer than the status quo by my estimation) would be complete transparency updated on a continual basis. But I can imagine it would be difficult to keep that up while making productive business relationships.
- yellowstuff 8y agoIs it "fair" that quant hedge funds have hundreds of PhDs developing algorithms to trade the markets efficiently, or that fundamental hedge funds spend millions on research? While there are a few restrictions around insiders trading, it is very much not the case that fairness in the sense of everyone having equal access to all information is or should be the goal of financial regulation. Matt Levine has written about this many times, here's one: https://www.bloomberg.com/view/articles/2016-12-06/supreme-court-leaves-insider-trading-law-alone https://www.bloomberg.com/view/articles/2016-12-06/supreme-c...
- frockington 8y agoI think its fair for people who spend time getting a PhD and refining algorithms to have an edge. What is the argument for why it is not fair?
- yellowstuff 8y agoMy point is that in the markets, like in sports, a "fair contest" does not mean that both parties are equally likely to be successful. "Fairness" means that the rules were followed. Right now a PhD with a model is allowed to use his information advantage if he's trading against someone less informed, but an insider to the company is not. It may be the case that insider trading laws as they currently exist are good and help financial markets work better, but if that's true it's not because no one with an information advantage should be allowed to trade.
- rdtsc 8y agoNot surprised a bit. Usually the reason crime is flourishing in those parts is because there is protection from withing the judicial and executive branches of the government. The police and judges are often part of, if not the ones running many of the crime rings. There is also the part where the Ukrainians then went on to blackmail Ieremenko, threatened to extradite him and asked him for a bribe. He paid up. Of course the go-between guy doubled the blackmail price (think big, right?), got his 50% share then forwarded the rest to the intel agency. And then Ieremenko realizes he couldn't be extradited anyway because Ukraine doesn't do that with its citizens! The article then says "the pair fell out when Ieremenko discovered he had been duped". I am surprised they hadn't had a boating accident of some sort, or fell on a knife, backwards a few times.
- ffmegpeg 8y ago> in those parts Not an Ukranian, but boy, does that horse look high!
- onetimemanytime 8y agonew account defending the "honor" of Ukraine as a corruption free country. Waste of time, people on HN are likely smarter than 95% of the world population. Did you pay Paul Manafort all the money owed? He really needs it now...
- askl56 8y agoHe's not defending the honour of Ukraine or making a political statement about Manafort. He's asserting that the US has more corruption in local police and justice departments than the average American would like to believe.
- rdtsc 8y ago> He's asserting that the US has more corruption in local police and justice departments than the average American would like to believe. He isn't asserting anything though, just throwing one-liners about horses around. Asserting would mean making an actual argument.
- kimjongmin 8y agoWhy prosecute when you can make money too?
- onetimemanytime 8y agoDuh! Sergei Ivanovich, we know what you're doing. But because we know your father (or 4th degree uncle) let's just split it and we'll just forget it. Russia is successful against CIA because the Russian mafia does its dirty work...go kill /threaten /maim these 5 people and you have a "get out of jail free card" on x,y, and z that you did.
- baybal2 8y ago>Russia is successful against CIA because the Russian mafia does its dirty work...go kill /threaten /maim these 5 people and you have a "get out of jail free card" on x,y, and z that you did. Nothing sound more ultimately true about the whole situation that this.
- rasz 8y agoCurrent Russian mafia is former KGB.
- qaq 8y agoCurrent Russian mafia is FSB
- quackerhacker 8y ago"Their algorithms are designed to pick up on stock prices fluctuating before major corporate announcements, indicating that those buying or selling have insider knowledge..." As someone who has coded high frequency algos that tracked orders and fill rate velocity, I love this little tidbit of knowledge that FINRA utilizes it's own types of analysis. It intrigues me to imagine the accuracy and dismissal of false positives. sorry nerding out on the tech
- bsder 8y ago> It intrigues me to imagine the accuracy and dismissal of false positives. sorry nerding out on the tech Probably not tech for false positives. You probably don't have to winnow too far before humans can handle the remainder.
- quackerhacker 8y agoThere absolutely has to be tech analysis of a trader's entire portfolio or majority of their trades in order to really investigate before it passes off to human review. The real beauty in this statement is the merging of fundamental analysis (news releases, ect.) with tech analysis. I don't mean tech analysis in the context of pivot points, sma's, rsi's, ect...I mean tech analysis on the evaluation of the winners of a significant price movement and their entire trades and current portfolio. THAT is the mind boggling algo. Just b/c a trader makes x amount on a move doesn't mean they had privileged info. A tech eval has to eval their entry and exits to see if they were prime/ideal moves and most importantly their order size and order type, but it ultimately comes down to pattern evaluating their order history across multiple assets and see if their transaction history is generally successful and positions are taking prior to news release...then flag for human review and substantiate evidence.
- darawk 8y agoThey're probably reviewing these things ex-post, quarterly or something. It's pretty straightforward to do this analysis, i'd say. Look for people that consistently long/short shortly before a substantial favorable dislocation. People doing HF are going to be picking up small dislocation, so a move-magnitude filter weeds them out. No discretionary traders are going to be as consistently correct and consistently well-timed. IMO it'd be a pretty straightforward filter to write.
- anonu 8y agoThe SEC complaint from 2015 is also a fun read: http://www.sec.gov/litigation/complaints/2015/comp-pr2015-163.pdf http://www.sec.gov/litigation/complaints/2015/comp-pr2015-16...
- gesman 8y agoSo did anyone studied SEC insider trading convictions and then went back to trading records to train AI/DL networks to learn to detect insider trading patterns in close-to-real time?
- anonu 8y agoNot gonna say its not possible... but its going to be very very hard. Only looking at market data is insufficient to determine whether there was insider trading. You need to know who was trading (the markets are anonymous) and many times insiders will direct their friends and family to trade for them... so you might need to plug a social network into your AI to filter out the false positives from using market data alone.
- chmike 8y agoI don't understand that the press release center couldn't be definitely secured once the problem was known.
- stef25 8y agoWhen GCHQ hacked the Belgacom servers they had a real hard time discovering and getting rid of the backdoors.
- SenHeng 8y agoSo a Borg is in charge of the US Cyber Consequences Unit. Resistance is futile?
- happywage 8y ago... in your newswire database. "GE To Declare Bankruptcy", "Lockheed Sold to Chinese", etc. Sit back and watch idiots buy fake info and lose billions.
- AznHisoka 8y agosounds like honeypot
- happywage 8y agoThis is actually the quasi-solution to a lot of problems. e.g. If you've got a database full of your employee's info, populate it with made-up info for a bunch of fake employees. When you use the database, use some secret method to distinguish which employees are real (maybe the sum of their employee ID number and birthdate is divisible by 197). If you ever get hacked and the database is stolen, good luck to the hackers selling a database where 99.5% of the info is fake. If you're a defense contractor, add a bunch of made-up project files for fake programs, complete with plans, designs, drawings, etc. If a foreign government manages to break in and steal them, they'll still have to try to figure out what's real and what's fake. For press releases, it's a lot simpler. You compose the press release and pre-upload it for release after an embargo date. But the salient details are obfuscated. "Our net income for this quarter were [ $1 million dollars | $100,000 | a loss of $500,000 ]." "We will be [ constructing a new facility in Phoenix, AZ | purchasing and renovating a facility in Boise, ID | demolishing our warehouse in Denver, CO ]" etc. When the embargo is up, instead of just automatically releasing the pre-prepared press release, you simply edit out the fake info then give the OK to release it. Security through obscurity isn't true protection. But it can make the thieves' jobs a lot harder.
- troels 8y agoYes, it's the good ole "trap street". Works for combating scrapers too.
- troels 8y agoSomewhat related. I wonder how often someone would plant false information that would cause a panic sell-off, then buy on the dip, before everyone realise that it was a lie? It's like the opposite of inside information. (Does this particular scheme have a name?) * Edit: A quick googling suggests this is fairly prevalent. Must be keeping the SEC busy.
- onetimemanytime 8y agoThey are dumb criminals and smart criminals. A certain amount of respect goes to these guys...and this is FU money we're talking about
- itake 8y agoI knew Igor a few months before his arrest. He worked as a general contractor for renovating houses. I was told he was on the cheaper end for contractors, but I was surprised to see him driving an Audi/ sports car when my previous contractor had a beat up ford.
- auslander 8y ago> profits made public by the SEC stands at over $100 million, but that represents only a fraction of the money authorities believe was made I wonder, if they gained this much, who lost this much? Or nobody lost?
- YPCrumble 8y agoEveryone who didn't have this information and invested in the same stocks lost. EDIT: "invested" here could mean purchased the stock, held the stock, or even sold the stock without the information. Depends on the information (e.g., is it good or bad news?).
- therealdrag0 8y agoThis has come up on freakanomics or planet money, but I can't find the episode.
- deleted 8y ago[deleted]
- wodenokoto 8y agoWhy do we keep a newswire database that stores these things before being published? Why don't companies and officials not hold on to these documents themselves? You could say newswire are better at protecting, but the companies who write the press releases will likely have a copy stores both before and after it enters newswire
- anonu 8y agoIf you are a registered company (like any publicly listed company in the USA) you need to release important information to as many people as possible in a timely manner. Newswire makes sense since it goes out to 1000s of newspapers and websites. It also makes sense to queue it up before release. Otherwise, that would give people listening to your earnings conference call or checking the EDGAR filings an unfair advantage over more accessible resources.
- anonu 8y ago"The logic being that the early trades were made on the basis of someone else’s insider information" This was one guy's defense. I love this - partly because so much of trading and investing is what I call "self fulfilling". There's only a trade to be done because other people are doing a trade.
- rajacombinator 8y agoFunny they should have caught them on Dendreon trading. Main takeaway ... if you’re going to do insider trading make sure you are really on the inside. (ie. Wall St and US govt)
- EnFinlay 8y agoAnyone else find this bit kinda creepy? > The Dubovoys used the same brokerage accounts repeatedly, and they owned some of them directly or through immediate family members with shared surnames. Their association could also be easily confirmed through the fact that they were part of the same church community. Is there a database out there where you can search "SELECT * FROM PEOPLE WHERE communities INCLUDES (SELECT communities WHERE lastName = "Dubovoys");" If you know what I mean.