2nd Circuit upholds convictions for hacked press release traders – Reuters
- Evidence sufficient to convict Vitaly Korchevsky and Vladislav Khalupsky
- Pair found guilty in 2018
(Reuters) – The 2nd U.S. Circuit Court of Appeals affirmed the convictions of two men found guilty of trading on corporate press releases that hackers obtained before their publication.
U.S. Circuit Court Judge John Walker Jr wrote for the court on Monday that the evidence jurors weighed in the trial of former hedge fund manager Vitaly Korchevsky, 56, and securities broker Vladislav Khalupsky, 51, was enough to support their convictions.
Attorneys for the men did not immediately reply to requests for comment on Monday. A spokesperson for the U.S. Attorney’s Office in Brooklyn declined to comment.
The two men were among 10 people, including seven traders and three Ukraine-based hackers, criminally charged in New York and New Jersey over the theft of more than 150,000 press releases from Business Wire, Marketwired and PR Newswire that had yet to be made public from February 2010 to August 2015.
Authorities said traders reaped more than $100 million from the stolen information, in the largest known hacking scheme to game U.S. financial markets.
Five of the individuals have pleaded guilty, while two others have not appeared in the U.S. to face charges. None of the news wires was accused of wrongdoing.
Korchevsky and Khalupsky had made various arguments on appeal, including that prosecutors failed to show that the information was obtained through a breach of duty to the companies or that investors were defrauded.
Walker, joined by U.S. Circuit Judges Susan Carney and Barrington Parker, rejected those arguments on Monday.
The court wrote that the pair were charged as “corporate outsiders,” meaning prosecutors did not have to show the trades breached a relationship of trust, as they would in an insider trading case.
The panel also held that the law covers fraud connected to securities transactions, including when hackers “misrepresented themselves to be authorized users” to obtain the press releases.
The case is United States v. Korchevsky, 2nd U.S. Circuit Court of Appeals, Nos. 19-197-cr, 19-780-cr.
For Korchevsky: Randy Singer, Rosalyn Singer and Kevin Hoffman of Singer Davis; and Steven Brill of Sullivan & Brill
For Khalupsky: Darrell Fields of Federal Defenders Of New York