US Charges 3 Chinese Traders With Hacking Into New York Law Firms

Brittany BishopDec 29, 2016

Federal prosecutors described them as "prominent US -based worldwide law firms with offices in NY".

Additional cyber hacking of law firms' data yielded secret information that allegedly enabled the suspects to ring up roughly $841,000 in illegal profits from the $395 million deal announced in May 2015 by Stamford, Ct. -based technology company Pitney Bowes (PBI) and Borderfree, a market leader in e-commerce solutions.

U.S. Attorney Preet Bharara in Manhattan said in a statement the case "should serve as a wake-up call for law firms around the world: you are and will be targets of cyber hacking, because you have information valuable to would-be criminals".

The U.S. government is seeking the extradition of Hong, prosecutors said. Hong, 26, and Hung, 50, are residents of Macau, while Zheng, 30, is a resident of Changsha, China. The trio of hackers reportedly began attacking the law firms as early as 2014, placing malware on system computers.

The malware permitted the hackers to monitor law firm communications about more than a dozen transactions in 2014 and 2015 that were discussed or contemplated, including some deals that were never consummated.

The case follows recent warnings issued by United States authorities of law firms being vulnerable to potential cyberattacks and is the latest of its kind to involve hacking.

Lawyers for the defendants, who also face a related civil lawsuit by the U.S. Securities and Exchange Commission, could not be immediately determined.

Authorities did not identify which law firms were victimized by the Chinese hackers. One defendant, Ian Hong, was arrested in Hong Kong on Christmas Day, but the other two suspects remain at large.

They profited by buying stock in firms imminently about to be acquired. Beginning in February 2015, Hong, Zheng and Hung purchased more than 210,000 Altera shares. They allegedly sold the shares for roughly $1.4 million in profits - the result of sales carried out days as the Altera shares soared approximately 26% after The Wall Street Journal reported the Intel-Altera talks.

Federal Bureau of Investigation assistant director-in-charge William Sweeney said: "The subjects charged in this case allegedly stole nonpublic information through unauthorized access to law firms' computers, and used the information for their own personal gain".

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