SEC says hack may have led to illegal Wall Street profits

SEC Discloses Breach That May Have Enabled Insider Trading

The US Securities and Exchange Commission has revealed that its electronic company filings system was hacked past year and the information may have been traded on, writes Dave Michaels for The Wall Street Journal.

A major computer hack at America's top stock market regulator is the latest sign that data stored in the highest reaches of US government remains vulnerable to cyber attacks, despite efforts across multiple presidencies to limit high-profile breaches that are so frequent many consider them routine.

The SEC said it is investigating the matter and is cooperating with law enforcement.

The system that was breached, known as EDGAR, is a popular way for investors to access the detailed financial reports companies that sell stock to the public must periodically release.

Hackers may have used information stolen from the U.S. financial regulator to make "illicit gain" through insider trading, the body's chairman admitted. Hackers exploited that vulnerability, resulting in "access to nonpublic information", he said.

However, it was not until August 2017 that the agency realised criminals may have used the hack to give themselves an advantage on the stock market.

Weekly scans of government systems by the Department of Homeland Security showed in January that the SEC had critical cyber security weaknesses but that vulnerabilities were worse at three agencies, including the Environmental Protection Agency and the Department of Health and Human Services.




The SEC has announced an eye-opening revelation-its online EDGAR filing system was hacked in 2016, and the hackers may have used the data to execute trades on non-public information.

The statement from Clayton also mentioned that some SEC laptops that could have stored private data were unable to be located during an internal review of the body in 2014. He added, "We believe the intrusion did not result in an unauthorized access to personally identifiable information, jeopardize the operations of the Commission, or result in systemic risk". Federal prosecutors alleged that 32 traders and hackers reaped more than $100 million in illegal proceeds in a scheme so brazen that the traders would send shopping lists of corporate news releases for sneak-peeking purposes to the hackers in order to place trades.

SEC chairman Jay Clayton revealed the hack of its Edgar database in a statement on September 20.

Ben Johnson, co-founder and CTO for infosec startup Obsidian Security, said the fact that the SEC breach occurred more than one year ago and the SEC didn't disclose it is troubling. The SEC regulates what companies must disclose to shareholders about breaches.

Here's what we know about the SEC data hack.

"I recognize that even the most diligent cybersecurity efforts will not address all cyber risks that enterprises face", Clayton wrote.

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