A Bad Day for Hacker/Insider Traders

Russian businessman found guilty in hacking, insider trading scheme

A Russian millionaire with ties to the Kremlin was convicted Tuesday of participating in an elaborate $90 million insider trading scheme using secret earnings information from companies such as Microsoft that was stolen from U.S. computer networks.

Vladislav Klyushin, 42, who ran a Moscow-based information technology company associated with the Russian government, was found guilty on all charges against him, including wire fraud and securities fraud, after a two-week trial in federal court in Boston.

“The jury saw Mr. Klyushin for exactly what he is — a cybercriminal and a cheat. He repeatedly gamed the system and finally got caught. Now he is a convicted felon. For nearly three years, he and his co-conspirators repeatedly hacked into U.S. computer networks to obtain tomorrow’s headlines today,” Massachusetts U.S. Attorney Rachael Rollins said in an emailed statement.

Motley Fool Hacker Gets 28 Months for Trading on Stolen Picks

An Idaho man who hacked the Motley Fool site and made millions of dollars trading on its stock recommendations before they were made public was sentenced to more than two years in prison.

David Stone, a freelance web developer, pleaded guilty in September to securities fraud. He was sentenced to 28 months on Tuesday by US District Judge Richard Berman in Manhattan.

Prosecutors said Stone used another person’s credentials to access Motley Fool’s internal systems in 2020, enabling him to see the popular personal finance site’s stock picks before they were released. Stone earned more than $4.8 million in profits …

SEC demand for client names is an ‘assault,’ law firm Covington says

Law firm Covington & Burling fired back at a lawsuit from the U.S. Securities and Exchange Commission on Tuesday, arguing the agency overstepped by asking it to identify clients affected by a 2020 cyberattack on the firm.

Covington said an SEC subpoena for the names of nearly 300 publicly traded companies whose information was accessed or stolen during the hack threatened to expose confidential client information that the firm is required to protect.

“The SEC’s effort to compel Covington to help the agency investigate the firm’s clients, without any evidence whatsoever of wrongdoing by Covington or those clients, is an assault on the sanctity and confidentiality of the attorney-client relationship,” Covington told the Washington, D.C., federal court hearing the case.

Oh ElonRemember last year when Elon Musk was going around pretending that Twitter Inc. was doing a whole assortment of fraud, hoping that some of it would stick so that he could get out of his deal to buy Twitter? That was annoying. It did not go well, for him, and he eventually dropped it and bought Twitter at the price he had originally agreed to. But if you go around telling everyone that a US public company is committing all sorts of fraud, then some securities lawyers are definitely going to sue the company for that alleged fraud, and they definitely did.

And now Musk owns the company and has to defend that fraud suit — hard, given that he has previously claimed to agree with it! — or else pay damages — unfair, since, in the somewhat imaginary world in which Twitter was doing a bunch of fraud, Musk is the biggest victim of that fraud! On the fraud theory of Twitter, Twitter was doing a bunch of fraud that propped up its stock price, and then Musk agreed to buy it at a premium to that inflated price, and then the fraud was disclosed, and then Musk grumbled but bought it anyway at that inflated premium price, and now the shareholders who sold get to sue him for more money? Seems very unfair, and yet somehow hilariously deserved.

FTX Class-Action Investor Suit Targets Sequoia Capital, Thoma Bravo, Paradigm

Venture capital and private equity firms including Sequoia Capital, Thoma Bravo and Paradigm were accused in a lawsuit of hyping the legitimacy of FTX, the cryptocurrency exchange that collapsed causing billions of dollars in losses.

The firms participated in a marketing campaign in 2021 to tout their own investments of hundreds of millions of dollars in FTX entities, according to the proposed class-action complaint filed Tuesday on behalf of investors. The promotion added an “air of legitimacy” to the enterprise that ended up going bankrupt in November and whose co-founder Sam Bankman-Fried now faces criminal charges, the investors allege.

Musk & Tesla Win Rare Securities Class Action Trial

A shareholder class action making its way to trial is an incredibly rare feat. Of the thousands of cases filed against public companies since the passage of the Private Securities Litigation Reform Act in 1995, it is believed that only 16 have resulted in trial verdicts, including Mr. Musk’s recent win. A majority of cases are dismissed, while the remaining actions settle prior to trial.