United States on Tuesday indicted three Chinese citizens with trading on confidential corporate information obtained by hacking into networks and servers of law firms working on mergers.
According to a report in Reuters, the three Chinese men, Iat Hong of Macau, Bo Zheng of Changsha, China, and Chin Hung of Macau were charged in an indictment filed in Manhattan federal court with conspiracy, insider trading, wire fraud and computer intrusion.
As per the reports, the three Chinese men allegedly made more than $4 million by placing trades in at least five United States company stocks based on inside information from unnamed law firms.
The U.S. Securities and Exchange Commission said in a related civil lawsuit that the three Chinese men allegedly listed themselves in brokerage records as working at information technology companies.
According to the media reports, Hong, 26, was arrested on Sunday in Hong Kong, while Hung, 50, and Zheng, 30, are not in custody.
The incident is the latest U.S. insider trading prosecution to involve hacking, and follows warnings by U.S. officials that law firms could become prime targets for hackers.
U.S. Attorney Preet Bharara told media persons in Manhattan that this case of cyber meets securities fraud should serve as a wake-up call for law firms around the world.
According to the prosecutors, the three Chinese men got inside information by hacking two U.S. law firms and targeting the email accounts of law firm partners working on mergers and acquisitions in April 2014.
Meanwhile, the Prosecutors did not identify the two law firms, or five others they said the three Chinese men allegedly targeted.
The indictment said that by using a law firm employee's credentials, the defendants installed malware on the firm's servers to access emails from lawyers, including a partner responsible for the Pitney deal.
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