SEC says it was hacked, possibly resulting in illegal profits

22 September, 2017, 00:48 | Author: Jeannette Greene
  • Hack of Wall St regulator rattles investors lawmakers. Reuters File

The data filed to the SEC often includes non-public "draft" versions of corporate filings, and the SEC also maintains a Consolidated Audit Trail (CAT) that could be used to determine patterns in trading.

Hackers exploited a vulnerability in the test filing component of the SEC's EDGAR system to access information that isn't available to the public, SEC Chairman Jay Clayton said in a statement.

The SEC says it had known about the intrusion in 2016 into its Edgar filing system, but learned this month that "nonpublic information" accessed may have been used for "illicit gain".

The SEC, like most companies, doesn't fully understand how the information in its various databases can be used. It was also discovered that staff have used private, unsecured email accounts to transfer confidential information.

This is not the first time EDGAR has been compromised. Hackers exploited that vulnerability, resulting in "access to nonpublic information", he said.

In recent years, nation-state and criminal hackers, as well as rogue employees, have stolen data from the Internal Revenue Service, the State Department and intelligence agencies, including millions of government employee files allegedly exfiltrated by the Chinese military, US officials say. An internal investigation was commenced immediately at the direction of the Chairman.

Such attacks undermine confidence in financial markets and can create risks for investors and consumers, the SEC said. In wake of the incident, Clayton said the SEC expects to hire more expertise around cybersecurity.

The SEC uses the EDGAR system for oversight of the system of public reporting by issuers and other registrants.

As we've described before, hacking gangs have made millions through the exploitation of sensitive corporate information they steal from companies, law firms and press newswires. taking advantage of the privileged knowledge through insider trading before it becomes public knowledge.

The SEC did not provide any information on what companies were affected by the breach or how extensive it was.

If the right information gets into the wrong hands it can greatly upset the stability of the market, and if hacks happen it's hard to trust trading on Wall Street to be fair. Two years ago it charged a group of mainly USA -based stock traders and computer hackers in Ukraine with the theft of thousands of corporate press statements ahead of their public release, resulting in more than $100 million in illegal profit.

Clayton revealed the infiltration in a September 20 statement highlighting the fundamental importance of secure data collection and storage to the SEC and market participants.


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