Hacker Made Millions After Breaching SEC Computers
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What prompted this episode about a hacker breaching SEC computers?
With your money briefing, I'm J.R. Whelan at The Wall Street Journal in New York. Imagine hacking into government databases, getting caught, then doing it again and scoring millions in profits off of confidential corporate earnings data. Well, that actually happened. We've got the story behind it. That's coming up. First, these money and market stories you should know. If you didn't have enough money withheld from your paychecks last year, the IRS has got some good news for you. It'll waive penalties for some people who didn't pay enough taxes through 2018, which illustrates the uncertainty surrounding the implementation of the tax law Congress passed at the end of 2017. Now, while the new law reduced taxes for most taxpayers,
It also complicated things by leaving some people vulnerable to penalties if the changes to their paycheck withholding didn't line up with the changes to their total tax bills. Taxpayers can normally avoid penalties if they had paid 90% of the current year's tax owed. Under the change announced Wednesday by the IRS, that number comes down to 85%. A Harvard Business School study focuses on what it calls a caregiver crisis in the U.S., and it finds that employers underestimate the struggle their employees face in balancing their professional and caregiving responsibilities. About 75% of U.S. workers face some kind of caregiving responsibility,
How did the hacker gain access to the SEC's EDGAR system and for how long did he snoop?
And of those, 32% say they have left a job because they couldn't balance work and family duties. The study found a disconnect in the workplace as well. Although 80% of workers said their productivity had been affected by their caregiving responsibilities, less than a quarter of employers said that caregiving was affecting their employees' performance. And the Federal Reserve says that student debt has prevented hundreds of thousands of young Americans from buying a home in recent years and may help explain why many college graduates have moved out of rural areas. The share of households headed by someone between the ages of 24 and 32 years old who owned a home from 2004 to 2014 fell from 45 percent to 36 percent, and the Fed says about 20 percent of that decline was directly due to households owing student debt.
It's a storyline you might find in a movie on Netflix. Hackers break into government database, pose as a company, see secret data from other corporations, and trade off the data. That actually happened, and Wall Street Journal financial regulation reporter Dave Michaels is on the line with us with details. So Dave, this was a Ukrainian man who essentially spent six months snooping around a government database. There were two...
hackers, according to an indictment that was returned in federal court in New Jersey. Both of these men are allegedly hackers who got into a database known as EDGAR, which is an enormous repository of information that is relevant to investors, including sort of the standard corporate filings that reveal how a company did in terms of earnings. for a quarter. So this Edgar database is full of information that if you got to it early enough and got a sneak peek before the rest of the market saw it, it could be very lucrative for a trader.
And he and his associates were able to trick SEC employees into giving them access by posing as SEC security personnel.
Yeah, that was one of the ways that they furthered their reach to into this database.
What types of SEC documents did the attackers find and why were 'test filings' valuable?
They sent these phishing emails to SEC workers, which made it look like the hackers were SEC security personnel. The SEC's documents in their case and the indictment, they don't give us a lot of detail on what those emails said, but clearly some SEC workers clicked on them And it gave the hackers allegedly another path to get deeper and deeper into the database so they could look for documents that would provide information that they or their conspirators could trade on.
And there is some detail in your story that's remarkable, not really a surprise. The difference in the trading results when this Ukrainian man and his associate have the illegal data in hand...
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Chapters
5 chapters
1
What prompted this episode about a hacker breaching SEC computers?
0:05–1:24
2
How did the hacker gain access to the SEC's EDGAR system and for how long did he snoop?
1:24–3:48
3
What types of SEC documents did the attackers find and why were 'test filings' valuable?
3:48–7:16
4
How much profit did trading on stolen SEC data reportedly generate compared with normal trading?
7:16–9:50
5
What social-engineering and phishing tactics did the hackers use to escalate access?
9:50–9:55
Speakers
2 identifiedMore from WSJ Your Money Briefing
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