UK Citizen Charged in $3.75 Million Insider Trading Scheme Involving Hacked Executive Emails

A 39-year-old UK citizen, Robert B. Westbrook, has been charged by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) for his role in a sophisticated hacking and insider trading scheme. Westbrook allegedly hacked into the computer systems of five U.S. public companies to obtain confidential earnings information, which he used to make approximately $3.75 million in illicit profits.

Method of the Hack

Westbrook's scheme involved resetting the passwords of senior executives' email accounts, including those of CFOs, chief accounting officers, and other high-ranking officials. He used genealogy sites and other online resources to guess the answers to security questions, allowing him to gain unauthorized access to the executives' Microsoft Office 365 and Microsoft Outlook accounts. Additionally, he employed Captcha solvers, VPN services, and Bitcoin to conceal his identity and cover his tracks.

Once inside the executives' email accounts, Westbrook set up automatic forwarding rules to send emails containing sensitive financial information to his own anonymous email accounts. He then used this nonpublic information to trade in the securities of the hacked companies ahead of their public earnings announcements, often establishing large and risky options positions and selling them shortly after the announcements.

Investigation and Charges

The SEC's investigation, which involved advanced data analytics and crypto asset tracing, uncovered Westbrook's activities despite his efforts to remain anonymous. The SEC has charged Westbrook with violating the antifraud provisions of the Securities Exchange Act of 1934 and is seeking civil penalties, disgorgement of his ill-gotten gains with prejudgment interest, and an injunction against future violations.

In parallel, the U.S. Attorney's Office for the District of New Jersey has filed criminal charges against Westbrook, including securities fraud, wire fraud, and five counts of computer fraud. If convicted, he could face up to 20 years in prison for securities and wire fraud, and five years for each count of computer fraud, along with substantial fines.

The investigation was conducted with the assistance of the FBI and involved collaboration with other regulatory authorities, including the UK Financial Conduct Authority. Westbrook was arrested in the UK and is expected to be extradited to the United States to face these charges.