The SEC is seeking emergency action against the Lohmus Haavel & Viisemann. In a an admirably creative, if illegal scheme employees at Lohmus successfully hacked Business Wire's embargoed press release database to get a jump on market announcements. From the SEC press release:

"We acted today to stop a clever and pernicious securities fraud and to preserve funds for investors. This case highlights that even when fraudsters invent new ways to violate the securities laws, the Commission will track them down and stop them, wherever they are located," said Daniel M. Hawke, Associate District Administrator of the Commission's Philadelphia District Office.

The Commission's complaint alleges that, in June 2004, Lohmus became a client of Business Wire for the sole purpose of gaining access to Business Wire's secure client website. Once defendants had access, they surreptitiously utilized a software program, a so-called "spider" program, which provided unauthorized access to confidential information contained in impending nonpublic press releases of other Business Wire clients, including the expected time of issuance.

The complaint further alleges that the information fraudulently stolen by the defendants has allowed them to strategically time their trades around the public release of news involving, among other things, mergers, earnings, and regulatory actions. Using several U.S. brokerage accounts, the defendants have bought long or sold short the stocks of the companies whose confidential press release information they have stolen, and purchased options to increase their profits.

Named in the Commission's complaint are the following defendants.

Lohmus Haavel & Viisemann, headquartered in Tallinn, Estonia, is an investment bank established in 1999. Lohmus, which also has offices in Latvia and Lithuania, provides corporate financing, private equity, asset management, investment services, and structured financing services to the Eastern European market.

Oliver Peek, age 24, is a citizen of Estonia currently residing in Tallinn. Peek is employed by Lohmus and works for its investment services team.

Kristjan Lepik, age 28, is a citizen of Estonia currently residing in Tallinn. Lepik is a partner at Lohmus.

Read the rest here.

-- MDT

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