On December 20, 2021, the Securities and Exchange Commission (“SEC”) announced fraud charges against five Russian nationals for engaging in a multi-year scheme to profit from stolen corporate earnings announcements obtained by hacking into the systems of two U.S.-based filing agent companies before the announcements were made public.

The filing agents assist publicly-traded companies with the preparation and filing of periodic reports with the SEC, including quarterly reports containing earnings information.

The SEC’s complaint, filed in federal district court in Massachusetts, alleges that defendant Ivan Yermakov (“Yermakov”) used deceptive hacking techniques to access the filing agents’ systems and directly or indirectly provided not-yet-public corporate earnings announcements stolen from those systems to his co-defendants Vladislav Kliushin (“Kliushin”), Nikolai Rumiantcev (“Rumiantcev”), Mikhail Irzak (“Irzak”), and Igor Sladkov (“Sladkov”).

According to the complaint, from 2018 through 2020, the traders used 20 different brokerage accounts located in Denmark, the United Kingdom, Cyprus and Portugal to generate profits of at least $82 million using the stolen information to make trades before over 500 corporate earnings announcements. The defendants allegedly shared a portion of their enormous profits by funneling them through a Russian information technology company founded by Kliushin and for which Yermakov and Rumiantcev serve as directors.

The U.S. Attorney’s Office for the District of Massachusetts announced criminal charges against the five defendants named in the SEC’s action and that defendant Vladislav Kliushin was extradited from Switzerland.

The SEC’s complaint charges each of the defendants with violating the antifraud provisions of the federal securities laws and related SEC antifraud rules and seeks a final judgment ordering the defendants to pay penalties, return their ill-gotten gains with prejudgment interest, and enjoining them from committing future violations of the antifraud laws.

Source: SEC.gov

Kehoe Law Firm, P.C.