A Moscow-based hedge fund manager, his investment firms and two Paris-based funds have agreed to pay about US$18 million to resolve a US regulator’s claims that they engaged in insider trading using hacked press releases from newswire services.
The US Securities and Exchange Commission (SEC) disclosed the deal with David Amaryan and his funds and the separate accord with Guibor SA and Omega 26 Investments Ltd in France in papers filed in federal court in Newark, New Jersey, on Thursday.
They were among 43 defendants sued by the SEC since August in connection with what it says was the theft of more than 150,000 press releases from Business Wire, Marketwired and PR Newswire before the corporate news became public.
The SEC said the scheme resulted in more than US$100 million of illegal profit over a five-year period. Three men have pleaded guilty in related criminal proceedings.
Amaryan, a Moscow resident, and investment firms Copperstone Alpha Fund, Copperstone Capital, Ocean Prime Inc and Intertrade Pacific SA earned US$8.1 million through the scheme, while Guibor and Omega 26 made US$6.6 million, the SEC said.
As part of the settlement, the SEC said Amaryan and his companies agreed to pay US$10 million. Guibor and Omega 26, both of which are proprietary trading funds and share an owner, agreed to pay US$4.2 million and US$3.72 million, respectively.
The defendants neither admitted nor denied wrongdoing as part of the settlements. Their lawyers declined to comment on Friday.
Authorities have said the scheme centered on the theft by Ukrainian hackers Oleksandr Ieremenko and Ivan Turchynov of press releases from the three newswire services from February 2010 to August last year.
Traders, including many with ties to Russia, allegedly gave the hackers “shopping lists” of releases they wanted to see in advance, including quarterly results of public companies.
Prior SEC settlements in the case include a US$4.2 million deal last month with Ukrainian-based Concorde Bermuda Ltd and a US$30 million accord in September last year with Ukrainia-based Jaspen Capital Partners Ltd and its principal, Andriy Supranonok.
The traders who have pleaded guilty include Arkadiy Dubovoy, Igor Dubovoy and Alexander Garkusha, all of whom are from Alpharetta, Georgia, a suburb of Atlanta.
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