SEC Vs. The Estonian Spiders
It’s not a pre-season NCAA basketball exhibition matchup, but a case where the Securities and Exchange Commission has accused an Estonian financial firm of spidering confidential Business Wire information and profiting on trades.
Making money on the stock market, in theory, is simple enough: buy low, sell high. If you bought Google at $85 and sold it today at $380.87 in after-hours trading, you have made money.
Investors in markets react to information, driving prices down or sending them skyward depending on what they learn about a business. In the movie “Trading Places“, Eddie Murphy and Dan Aykroyd clean up by thwarting an insider trading scheme and using the information themselves to profit.
In specific legal terms, what they did was ‘highly illegal’. But there’s always someone ready to try a new angle on insider trading to get an edge and profit, profit, profit. The SEC has accused an Estonian financial firm, Lohmus Haavel & Viisemann, of tapping into the Business Wire site and using a spider program to collect confidential press releases before they were made public.
The electronic theft of over 360 press releases led to the traders earning nearly $8 million in profits since January 2005 with their advance trading. The SEC filed an emergency action with the Southern District Court for New York to freeze the company’s assets and repatriate funds moved out of the country back to the U.S., according to a press release from the agency.
In the release, the SEC described more details of the crime:
David Utter is a staff writer for WebProNews covering technology and business. Email him here.