In a case of “cyber meets securities fraud,” the United States Attorney’s Office for the Southern District of New York (“SDNY”) recently indicted three foreign nationals on charges of insider trading, wire fraud, and computer hacking for allegedly trading on information they stole from the computer networks of two major New York law firms. A parallel enforcement action brought by the Securities and Exchange Commission – its first time bringing civil charges based on the hacking of a law firm’s computer network – alleges insider trading and other violations of the Securities Exchange Act of 1934.2 The case is a wake-up call that hackers are becoming more creative both in their choice of victims and in how they use the information they steal, requiring companies to reconsider what type of data is prone to hacking and whether their security protocols are sufficient to detect and prevent it. It is also a reminder to certain federal and state regulated entities that they may soon have to comply with new cybersecurity rules requiring robust policies and procedures governing how confidential data and computer networks are handled and protected. Read More
