According to a report by Barron’s, four hackers are under arrest for stealing a look at company earnings before their release. In one of the largest insider trading hacks ever to be investigated, four people, led by an executive of a Russian cybersecurity firm, illegally looked at the earnings of more than 165 companies, before their release dates.
The hackers then bought or sold stock in those companies accordingly, making more than $82 million from their suspiciously successful trades. The SEC says that statistically, the chance that the four defendants would have chosen the trades they made in the days and hours before their earnings releases, is one in a trillion.
Interestingly, the hackers did not access the information by breaking into the computers of major companies like Tesla (TSLA) and Microsoft (MSFT). Instead, they found the link between the publicly traded companies and the SEC: they broke into the computers of two companies used by millions of public companies to serve electronic filings to the SEC.
First, they stole the passwords of employees at those filing companies, and then they installed malware that allowed them to see the coveted financial information as it made its way to the SEC. Between 2017 and 2020, the hackers stole looks at more than 500 pre-released earnings reports, then used that information to their advantage.
Nearly every public company in the U.S. files with the SEC through one of the three major filing companies. While these companies emphasize their high levels of security, it is nearly impossible to completely safeguard digital files. Cyber attacks are highly prevalent; according to Norton (NLOK), cyberattacks occur at the rate of at least 2,200 per day.
As illustrated by this story, demand for cybersecurity businesses is likely to grow as the need for its services increases. You can find an in-depth comparison of the best cybersecurity stocks on TipRanks.
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