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SEC charges 9 traders, hackers for 2016 corporate filings system hack

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SEC charges 9 traders, hackers for 2016 corporate filings system hack

The SEC brought charges against an international network of nine traders and hackers allegedly behind a 2016 hack of the agency's corporate filings database.

On Jan. 15, the regulator sued seven individuals and two entities that it says were at the heart of an illegal trading operation that used nonpublic earnings releases to reap at least $4.1 million in profits. Between May and October 2016, the defendants allegedly used confidential earnings releases that had been accessed in a breach of the SEC's corporate filings database known as the Electronic Data Gathering, Analysis and Retrieval system, or EDGAR.

The charges come more than a year after the SEC publicly disclosed the 2016 hack, which raised concerns across Wall Street and corporate America about the security of nonpublic material financial information filed with the regulator. The SEC has been working since the hack's disclosure to bolster its cybersecurity protocols, Chairman Jay Clayton said.

Ukrainian hacker Oleksandr Ieremenko, a defendant who faced similar allegations in the past, was allegedly behind the EDGAR hack, according to the SEC. In 2015, the agency sued Ieremenko for allegedly hacking into a handful of newswire services to steal hundreds of corporate earnings releases before they were publicly available. The 2015 hack allegedly led to illegal profits exceeding $100 million, the SEC said at the time.

After the 2015 charges were filed, the SEC claims Ieremenko focused on breaching EDGAR using "deceptive hacking techniques." The regulator claims Ieremenko was able to avoid user authentications inside of EDGAR to extract nonpublic filings from the SEC's systems, which were passed along to various traders.

The traders who allegedly profited from the hack were based in Los Angeles, Ukraine and Russia. The two entities named as defendants in the case are based in China and Belize.

The SEC is seeking a final judgment that would order the defendants to pay penalties and return their illegal gains with prejudgment interest, and enjoin them from committing future violations of anti-fraud laws. The Department of Justice filed parallel criminal charges in the case.