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Two Convicted In $30 Million Insider-Trading Scheme With Links To Ukraine

Former Wall Street trader Vitaly Korchevsky

A jury on July 6 convicted two men in a $30 million insider-trading case that U.S. authorities have called one of the largest on record, using sensitive business information stolen by computer hackers based in Ukraine.

Vitaly Korchevsky, a former Morgan Stanley vice president, and his co-defendant, Vladislav Khalupsky, were each found guilty on two securities fraud and three conspiracy counts, U.S. Attorney Richard Donoghue said. The two face a maximum of 20 years in prison.

Donoghue said the men were key players in what he called a "massive" and "sophisticated" scheme involving 10 defendants, a "criminal network" including seven New York-based traders and three Ukraine-based hackers, who remain at large.

Authorities said more than 150,000 corporate press releases were hacked before their scheduled release from February 2010 to August 2015, with the hackers giving the sensitive business information in the releases to the traders so it could be used to generate more than $30 million of illegal trading profits.

Traders allegedly gave the hackers "shopping lists" or "wish lists" of releases they wanted to see in advance, targeting such companies as Advanced Micro Devices, Caterpillar, Home Depot, Panera, Qualcomm, and Weight Watchers International.

The hackers then broke into the computer networks of three business newswires that distribute corporate press releases -- Marketwired, PR Newswire, and Business Wire -- to obtain the requested information.

Korchevsky, 53, an emigre to the United States who was born in Kazakhstan, and Khalupsky, 48, who has lived in Brooklyn and Odesa, Ukraine, were convicted after a monthlong trial.

Korchevsky's lawyer Steven Brill called the verdict "sad" and said he plans "a full appeal."

Khalupsky's lawyer Mildred Whalen said he was "disappointed" and also plans to appeal.

With reporting by Reuters
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