The SEC has nailed an Estonian investment bank and a couple of hackers for sneaking into the Business Wire press release distribution system to find out which public companies would be making significant announcements in the near future. They then bought stock or sold it short for a profit.
Since the start of this year, they netted nearly $8 million on the scam. Business Wire points out that these hackers didn’t get full access, apparently just were able to look at release times and headlines. Of course, that’s enough to trade on in many cases.
This incident demonstrates one of the pitfalls of the increasingly online application driven business environment. Anytime data is stored centrally — for any service, with any company — it presents a larger opportunity for hackers.
That’s not a criticism of BusinessWire or a knock on hosted applications generally. Hey, CustomScoop is one, too, though we don’t have the sort of information that most hackers could profit from. It’s just something to be aware of — and a challenge for application providers to meet.
(via Paul Kedrosky)