USA accuses 3 Chinese men of hacking law firms

A trio of Chinese nationals has been charged in a Manhattan federal court with insider trading after allegedly hacking into servers at USA law firms.

They allegedly used the information they stole to purchase the shares of three companies ahead of public announcements that those companies had entered into agreements to merge.

"This case of cyber meets securities fraud 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", Manhattan U.S. Attorney Preet Bharara said in a statement Tuesday.

According to SFGate, Ian Hong, Bo Zheng and Hung Chin were accused by the Securities and Exchange Commission and the USA attorney's office for the Southern District of NY for illegal profits from stock trades based on nonpublic information from April 2014 to late 2015. Hung, 50, and Zheng, 30, are not in custody, authorities said. At least two of the firms targeted were successfully hacked and insider information was stolen from their computers.

The Securities and Exchange Commission filed a parallel civil lawsuit that seeks an asset freeze aimed at preventing the alleged suspects from cashing in on their alleged trading gains.

In addition, the defendants are alleged to have repeatedly attempted unauthorised access to the networks and servers of five other firms.

While the law firms were not identified in the indictment, information on companies being targeted for acquisition helped the trio benefit from speculative stock purchases due to their inside line on what could happen with sales of the companies. Three Chinese allegedly targeted emails of Intel's law firm. Following Hong's arrest on Christmas Day, he now faces extradition proceedings and is expected to reappear in court on 16 January 2017.

The group was able to breach at least two different high-profile law firms based in NY, which the DoJ has neglected to name. The defendants also traded shares of pharmaceutical company InterMune and e-commerce company Borderfree in advance of merger deals announced in 2014 and 2015, respectively, according to the SEC. 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.

At least seven firms were targeted by the alleged perpetrators between April 2014 and late 2015, according to the charges.

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