Date
23 June 2017
US Attorney Preet Bharara said the case "should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking". Photo: Reuters
US Attorney Preet Bharara said the case "should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking". Photo: Reuters

US accuses Chinese citizens of hacking law firms, insider trade

Three Chinese citizens have been criminally charged with hacking into the computer networks and servers of two US law firms in order to obtain confidential corporate information about mergers and using it for illegal stock trading, US prosecutors said on Tuesday.

Iat Hong of Macau; Bo Zheng of Changsha, capital of central China’s Hunan province; and Chin Hung of Macau were charged in an indictment filed in Manhattan federal court with conspiracy, insider trading, wire fraud and computer intrusion, Reuters reports.

Prosecutors said the men made over US$4 million by placing trades in at least five company stocks based on inside information from unnamed law firms, including about deals involving Intel Corp. and Pitney Bowes Inc.

The men listed themselves in brokerage records as working at information technology companies, the US Securities and Exchange Commission said in a related civil lawsuit.

Hong, 26, was arrested on Sunday in Hong Kong, while Hung, 50, and Zheng, 30, are not in custody, prosecutors said. Defense lawyers could not be immediately identified.

The case is the latest US insider trading prosecution to involve hacking, and follows warnings by US officials that law firms could become a prime target for hackers.

“This case of cyber meets securities fraud should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals,” US Attorney Preet Bharara in Manhattan said.

Prosecutors said that beginning in April 2014, the trio obtained inside information by hacking two US law firms and targeting the email accounts of law firm partners working on mergers and acquisitions.

Prosecutors did not identify the two law firms, or five others they said the defendants targeted.

But one matched the description of New York-based Cravath, Swaine & Moore LLP, which represented Pitney Bowes in its 2015 acquisition of Borderfree Inc., one of the mergers in question.

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