SEC sues Estonian firm over press release thefts

02.11.2005
The U.S. Securities and Exchange Commission is suing an Estonian financial services firm and two of its employees for allegedly stealing press releases about various U.S. companies before they became publicly available.

The suit, filed Tuesday in federal court in the Southern District of New York, contends that Lohmus Haavel & Viisemann, based in Tallinn, Estonia, and employees Oliver Peek, 24, and Kristjan Lepik, 28, made at least US$7.8 million from illegal stock trades after stealing more than 360 confidential press releases from Business Wire, according to a statement from the SEC. The releases included confidential information from more than 200 U.S. companies.

"We found out about it from a member of the investing public who noticed a suspicious spike in volume in a particular stock prior to a merger announcement," said Daniel Hawke, associate district administrator in the SEC's Philadelphia district office. He declined to name the stock.

Business Wire gives clients secure access to its Web site so they can submit news releases to the public, according the the SEC complaint.

SEC officials said the Estonian firm allegedly became a Business Wire client to gain access to the secure Web site. Once the defendants had access, they used a "spider" program to find confidential information in press releases that had not yet been publicly distributed, the SEC said. That information then allowed the defendants to time their trades around the release of news involving such things as corporate mergers, earnings and regulatory actions, according to the SEC.

"Using several U.S. brokerage accounts, the defendants have bought long or sold short the stocks of companies whose confidential press release information they have stolen and purchased options to increase their profits," the SEC said.