The DOJ and SEC charged five Russian nationals for their involvement in a multi-year, global scheme that included (i) hacking into the systems of two U.S.-based filing agent companies, (ii) stealing nonpublic information, such as corporate earnings reports, and (iii) trading based on this material, nonpublic information. The defendants generated at least $82 million from this illegal scheme.
The DOJ criminally charged the defendants with all or some of the following charges: (i) conspiracy to obtain unauthorized access to computers and obtaining the unauthorized access, (ii) conspiracy to commit wire fraud and wire fraud, and (iii) conspiracy to commit securities fraud and securities fraud. Charges were unsealed in U.S. District Court in Massachusetts on December 20, 2021 (see here and here).
According to the DOJ's charging documents, several of the individuals worked at a Moscow-based IT company that offered services to identify exploitable vulnerabilities in a computer system for defensive purposes. One of the individuals was a former Russian intelligence official previously charged in U.S. federal courts for an alleged hacking and interference role in the 2016 U.S. elections, and an alleged hacking and disinformation role targeting international sports anti-doping agencies.
One of the defendants, Vladislav Klyushin, was arrested in Switzerland and extradited to the U.S. on December 18, 2021. The other four defendants - Ivan Ermakov, Nikolai Rumiantcev, Mikhail Vladimirovich Irzak and Igor Sergeevich Sladkov - remain at large.
The DOJ charges carry a maximum sentence of three to 20 years of prison time, three years' supervised release and a $250,000 fine, along with restitution and forfeiture.
The SEC Complaint filed in Federal District Court in Massachusetts charged the defendants with violating the antifraud provisions of the federal securities laws. The SEC is seeking a judgment ordering the defendants to pay penalties, return their fraudulently acquired earnings, and cease further violations of the antifraud laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
