Two Ukrainians charged with hacking into SEC's EDGAR database

The SEC announced the breach in September 2017. (Getty)

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The Securities and Exchange Commission and Department of Justice announced charges Tuesday against an alleged Ukrainian hacker and several other suspects in a scheme where nonpublic information was taken from the commission’s corporate filing system and used for illegal financial trading.

Oleksandr Ieremenko is alleged to have hacked into the SEC’s EDGAR system, accessing “test files,” which companies can use to submit information ahead of their public earnings reports. Sometimes companies include nonpublic information in those filings. According to the SEC and U.S. Attorney’s Office of  New Jersey, Ieremenko extracted nonpublic test files from SEC servers, and then passed the information to different groups of traders.

The traders made transactions before at least 157 earnings releases from May to October 2016, generating at least $4.1 million in illegal profits.

The SEC discovered the breach in 2016 after realizing there was a vulnerability in the EDGAR system. The agency didn’t suspect until August 2017, however, that the breached information was used for illicit trades.

Ieremenko, 27, and a co-conspirator, Artem Radchenko, 26, have been charged with securities fraud conspiracy, wire fraud conspiracy, computer fraud conspiracy, wire fraud and computer fraud. Neither person has been apprehended.

Ieremenko has been on the run since 2015, when he is alleged to have conspired with another group of securities traders to hack into three newswire distribution companies and steal press releases being prepared for distribution that contained market-sensitive information.

Additionally, the SEC has charged the following people and entities with violating the federal securities antifraud laws:

  • Sungjin Cho, Los Angeles
  • David Kwon, Los Angeles
  • Igor Sabodakha, Ukraine
  • Victoria Vorochek, Ukraine
  • Ivan Olefir, Ukraine
  • Andrey Sarafanov, Russia
  • Capyield Systems, Ltd. (owned by Olefir)
  • Spirit Trade Ltd.

The SEC is looking for a judgment where those entities would pay penalties and return the money they made from the illegal trades.

You can read the full charging document below.

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Department of Justice, EDGAR, hack, SEC, Securities and Exchange Commission
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