Trader accused in $100 mln hacking scheme pleads not guilty in U.S

Reuters News
Posted: Sep 02, 2015 4:28 PM

By Alice Popovici

NEWARK, N.J. (Reuters) - A man charged over his alleged role in a more than $100 million insider trading scheme that involved hacking into networks that distribute corporate news releases pleaded not guilty on Wednesday.

Arkadiy Dubovoy, who spoke Russian and used an interpreter, entered his plea to securities fraud, wire fraud and conspiracy charges in a brief appearance before U.S. District Judge Madeline Cox Arleo in Newark, New Jersey.

A Nov. 4 trial date was set. Michael Critchley, a lawyer for Dubovoy, declined to comment after the hearing.

Dubovoy's son Igor has also been charged, and appeared earlier Wednesday before U.S. Magistrate Judge Cathy Waldor, also in Newark.

Igor Dubovoy last week was unable to meet a $3 million bond set by a federal judge in Atlanta before his case was moved to New Jersey. Prosecutors said the Dubovoys are from Alpharetta, Georgia, an Atlanta suburb.

Both men were among 32 defendants, including traders and hackers, charged last month by U.S. authorities over an alleged five-year scheme to steal more than 150,000 press releases from Business Wire, Marketwired and PR Newswire before the news became public.

Nine of the defendants were criminally charged, including seven who prosecutors said were traders and two who were said to be hackers. The Dubovoys were two of the traders. Five of the nine were arrested in the United States, and four were at large in Ukraine.

Prosecutors said traders gave hackers "shopping lists" of press releases they wanted to peek at in advance and then made trades before more than 800 of the stolen releases were made public.

Arkadiy Dubovoy was among the more successful traders, accounting for more than $11 million of illegal profit after trades in such companies as Align Technology Inc and Caterpillar Inc, prosecutors said.

Another trader, Morgan Stanley alumnus and hedge fund manager Vitaly Korchevsky, made more than $17 million of illegal profit, prosecutors said. A federal judge in Brooklyn, New York, on Aug. 26 ordered Korchevsky's release on $2 million bond.

The U.S. Securities and Exchange Commission, which brought related civil charges in the case, said the conspiracy included traders in New York, Cyprus, France, Malta and Russia.

Business Wire is a unit of Warren Buffett's Berkshire Hathaway Inc, and PR Newswire is a unit of Britain's UBM Plc.

(Reporting by Alice Popovici; Editing by Leslie Adler)