A U.K. man allegedly hacked the accounts of senior corporate executives at five U.S. public companies to gain access to forthcoming corporate earnings, and then made millions of dollars trading on that information.
The U.S. Securities and Exchange Commission (SEC) filed a complaint against Robert Westbrook, 39, of London, U.K., in U.S. district court, alleging that he violated U.S. securities law by hacking into the systems of the five companies to get early access to their unreleased financial results — and then trading ahead of the public release of those results, generating US$3.75 in illicit trading profits.
In a parallel action, Westbrook was also charged criminally with securities fraud, wire fraud and five counts of computer fraud by the U.S. attorney’s office for the District of New Jersey.
The allegations have not been proven.
According to the SEC’s complaint, Westbrook allegedly used various techniques to gain access to the companies’ systems, including misrepresenting his identity to reset the passwords of senior executives’ accounts to gain unauthorized access to the companies’ systems.
“Westbrook gained unauthorized access into the hacked companies’ computer systems to obtain pre-release corporate earnings information — including draft earnings releases, press releases, and scripts — and then used that information to trade in the securities of the hacked companies in advance of their public earnings announcements,” the SEC alleged.
The regulator further alleged that Westbrook traded ahead of at least 14 earnings announcements, typically by establishing, “large and risky options positions in the hacked companies’ securities, and often [selling] out of those positions shortly after the public earnings announcements.”
“As this case demonstrates, even though Westbrook took multiple steps to conceal his identity — including using anonymous email accounts, VPN services, and utilizing bitcoin — the commission’s advanced data analytics, crypto asset tracing, and technology can uncover fraud even in cases involving sophisticated international hacking,” said Jorge Tenreiro, acting chief of the SEC’s crypto assets and cyber unit, in a release on Friday.