Insider Trading Scandal Revealed by Password Resets in Major Cyber Fraud Case

Insider Trading Scheme Utilizing Password Resets

Federal prosecutors have charged a man for an alleged hack-to-trade scheme that earned him millions of dollars by breaking into the Office365 accounts of executives at publicly traded companies and obtaining quarterly financial reports before they were released publicly.

Details of the Cyber Fraud

• The action taken by the office of the US Attorney for the district of New Jersey accuses UK national Robert B. Westbrook of earning roughly $3.75 million in 2019 and 2020 from stock trades that capitalized on the illicitly obtained information.
• After accessing it, prosecutors said he executed stock trades. The advance notice allowed him to act and profit on the information before the general public could.

Regulatory Response

The US Securities and Exchange Commission filed a separate civil suit against Westbrook seeking an order that he pay civil penalties and return all ill-gotten gains.

“The SEC is engaged in ongoing efforts to protect markets and investors from the consequences of cyber fraud,” Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement.

“As this case demonstrates, even though Westbrook took multiple steps to conceal his identity—including using anonymous email accounts, VPN services, and utilizing bitcoin—the Commission’s advanced data analytics, crypto asset tracing, and technology can uncover fraud even in cases involving sophisticated international hacking.”