On Monday, the Securities and Exchange Commission (SEC) announced the filing of a complaint against five Russian nationals over their involvement in the hacking of two U.S. companies to obtain non-public earnings information prior to its scheduled release and trading on that information in violation of the Securities Exchange Act of 1934’s anti-fraud provisions.
The District of Massachusetts complaint asserts that, without authorization, defendant Ivan Yermakov accessed two companies that assist SEC-regulated entities with “the preparation and filing with the SEC of periodic and other reports, including reports containing earnings information.” According to the complaint, Yermakov passed the stolen not-yet-public corporate earnings announcements to co-defendants Vladislav Kliushin, Nikolai Rumiantcev, Mikhail Irzak, and Igor Sladkov.
From 2018 through 2020, the defendants used 20 different brokerage accounts located in Denmark, the United Kingdom, Cyprus, and Portugal to trade. They reportedly made illicit gains of at least $82 million using the stolen information to buy and sell shares before the public release of more than 500 corporate earnings announcements. The defendants purportedly shared their enormous profits by funneling them through a Russian information technology company founded by one defendant and partly overseen by two others who serve as directors.
Monday’s complaint seeks a judgment ordering the defendants to pay civil penalties, return their ill-gotten gains with interest, and enjoining them from further anti-fraud law violations. Separately, the SEC’s press release noted that the U.S. Attorney’s Office for the District of Massachusetts simultaneously announced criminal charges against the five defendants and that defendant Kliushin was extradited from Switzerland.
