Feds: Insider trader, hacker ring targeted shares of Edwards, Align Technologies among others

Edwards Lifesciences (NYSE:EW) and Align Technology (NSDQ:ALGN) are among a handful of companies whose shares were exploited as part of a $30 million hacking and securities trading scheme, according to federal prosecutors.

U.S. prosecutors have charged 9 people over their alleged roles in the hacking operation to obtain corporate press releases from Business Wire, MarketWired and PR Newswire before they were made public, which they said generated more than $30 million of illegal trading profit.

Authorities said the operation began around February 2010, as alleged Ukranian hackers began to infiltrate press release distributors to gain access to the corporate news and financial results before it was made public.

According to the indictments, the news was then passed to traders who made illegal trades in stocks and options based on the stolen information, with foreign shell companies being used to share the rewards.

Charges brought against the various defendants include securities fraud, and conspiracies to commit securities fraud, wire fraud and money laundering.

The criminal case marks the first U.S. prosecution alleging a securities fraud scheme using hacked inside information. It is also the largest known suspected case of hacking that resulted in insider trading.

Until now, the SEC had brought only a handful of civil cases against individual hackers.

A press conference to discuss the charges is scheduled for 11:30 a.m. EDT (1530 GMT) in Newark, New Jersey. A spokeswoman for the FBI said 5 of the defendants have been arrested.

The U.S. Securities and Exchange Commission brought a related civil lawsuit charging many more defendants, and alleging that the thefts resulted in more than $100 million of illegal profit. It is seeking civil penalties and asset freezes, as well as the recoupment of illegal profits.

None of the press release distributors or companies whose securities were traded were criminally charged. Business Wire is a unit of Warren Buffett’s Berkshire Hathaway Inc.

Content from Reuters was used in this article.

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