How an International Hacker Network Turned Stolen Press Releases into $100M
theverge.com
theverge.com
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
Probably not tech for false positives.
You probably don't have to winnow too far before humans can handle the remainder.
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.
Not only does it contradict every post-hire training I've ever sat through, but Martha Stewart didn't go to prison for the fun of it-- she was a recipient of insider information three or four degrees removed from the source. It was very much illegal for her to use other people's insider information.
The standing definition is that if you are trading on knowledge not available to the public regardless of how it was sourced or laundered, it's insider trading. I'd genuinely like to see any references you have that can attest to this more lenient interpretation-- it seems entirely self-defeating.
Martha Stewart went to jail for lying to the Feds, not insider trading, IIRC.
This is dangerously incorrect in the US.
You may not use ANY material business information that is not available to other traders.
Now, you may do your own analysis of the business or the market and act on that. You can hire private investigators to dig through public trash to monitor pizza consumption and act on that. You can even use public web APIs to calculate actual customer acquisition numbers (shady, but probably just on the technically legal side of the line) and act on that.
But, if you have any information about a company not generally available to the public, you may not act on it.
The “manipulative and deceptive devices” prohibited by Section 10(b) of the Act ( 15 U.S.C. 78j) and § 240.10b-5 thereunder include, among other things, the purchase or sale of a security of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other person who is the source of the material nonpublic information.
The list is long but not total. If you happen to overhear something at lunch one day that’s fair game. The chain can be long and thin but it needs to exist. Aka A lawyer who’s client is the husband of an accountant for a company trying to do a takeover and your out of luck. Now it’s safer to shorten that to non public information = off limits, but not accurate. https://www.americanbar.org/content/dam/aba/administrative/l...
‘The Court, however, determined that, for a tippee to be liable, “the insider personally [must] benefit, directly or indirectly, from his disclosure.”35 In the Dirks case, the insider who provided the confidential information did so to expose a fraud in the company, not for any personal benefit. Therefore, the Court held, the insider had not breached his duty to the company’s shareholders, so the defendant (tippee) in Dirks could not be liable for insider trading.‘
okay, knows prominent traders and hackers who trade US equities from Russian timezones, small world?
I don't like that story
This excerpt most likely implies that the inside trades were for commodities (future contracts) and was sent to one of the relative people involved in the hack.
What would be irony (but of course is speculation) is if any of the brokerages that the hackers submitted trades thru did front-running (matching their trades at entry).
> Since 2010, the SEC’s Analysis and Detection Center has joined Wall Street’s self-regulator, the Financial Industry Regulatory Authority (FINRA), in monitoring the markets for signs of insider trading. Their algorithms are designed to pick up on stock prices fluctuating before major corporate announcements, indicating that those buying or selling have insider knowledge
> One defendant in the civil case, David Amaryan, whose company Copperstone Capital won an award for best Russian hedge fund in January 2015, claimed that one of his employees devised an algorithm to pick up early trades occurring on the market and mimic them. The logic being that the early trades were made on the basis of someone else’s insider information. ... Amaryan and his three companies agreed to pay $10 million to the SEC.
there's no precedent here, the government always does stuff like this
they got bullied in a civil case, the prosecutor caught them in a lie as they misjudged how the US government will nail them, and then they accepted a settlement deal
https://www.reuters.com/article/us-insidertrading-cyber-sec/...
The SEC's problem is that their interpretation of laws are very nuanced and they need to avoid jury trials and appeals courts at all costs. Financial crimes are hard to prove and it is hard to determine if they are actually crimes. Yes the executive branch (SEC) says "acting like this is criminal wrongdoing so we will try you in civil court and also tell the Department of Justice", and this is reflected in the social contract that people imagine to be so, but the judicial branch and the constitution doesn't necessarily have a way to agree with the SEC. The jury in the lower trial courts are also hard to convince, because proving intent and proving which law was broken is extremely hard, all while going up against the wealthiest defendants on the planet.
see: Chickenshit Club https://www.nytimes.com/2017/07/05/books/review/the-chickens...
The SEC does no-admit no-deny settlements because of this. The negotiation amounts are very informal between lawyers. So just kickback and relax, emphasis on kickback.
That Ukrainian voluntarily came to clear their name and got tripped up during cross examination. Stay opened up to a perjury charge or advance towards "settling" with the US just like their "perpetual settlement" with Ukranian authorities.
Some people just don't like it because they don't think it's fair.
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.
Matt Levine has written about this many times, here's one:
https://www.bloomberg.com/view/articles/2016-12-06/supreme-c...
Imagine you're an executive with inside information that you think will make the stock go up. So you buy some stock (from an existing shareholder, obviously), and then the stock goes up. That shareholder rightly will feel stiffed.
Conversely if you sell stock and it goes down, the person you sold it to--now a shareholder to whom you have a fiduciary responsibility--is left holding the bag.
The fact that it's an insider rather than an outsider that they're trading with doesn't make any difference to whether they win or lose.
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.
Not an Ukranian, but boy, does that horse look high!
"banking frauds, rating frauds, international price fixing,"
But since we are comparing things, I'll take banking frauds and price fixing over murder, routine torture, ability to buy your freedom following murder from judges, prosecutors and even DNA lab tester grunts. And by torture I do not mean "we pretended to drop the person on the concrete floor", but putting a gas mask on their head and closing the breathing hole until they are ready to confess.
Did you ever feel bombs going off while sitting at home, feeling seemly safe? I have. I was doing homework after school waiting for my parents to come home and the local mafia was trying to kill a rival bank CEO who didn't submit to their "protection", so they blew up his apartment, including 4 other surrounding apartments.
I was on the other side of the door in a police station and heard people screaming in pain while being tortured. I saw murderers and rapists getting off with a slap of a wrist. Judges who didn't "get in line" disappearing overnight. I'll take price fixing any day over all that.
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.
"GE To Declare Bankruptcy", "Lockheed Sold to Chinese", etc. Sit back and watch idiots buy fake info and lose billions.
* Edit:
A quick googling suggests this is fairly prevalent. Must be keeping the SEC busy.
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.
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
I wonder, if they gained this much, who lost this much? Or nobody 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?).
> 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.