The Securities and Exchange Commission recently filed civil, insider trading charges against Robert B. Westbrook, a UK citizen, for hacking into the computer systems of five U.S. public companies to obtain their corporate earnings results and using that material, nonpublic information for his own personal gain by trading in advance of their public release. This fraudulent tactic is commonly known as a “hack-to-trade-scheme.”
The SEC civil action was filed in the U.S. District Court for the District of New Jersey and charged Westbrook with violating the antifraud provisions of the federal securities laws, namely: Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
According to the SEC complaint, between approximately January 2019 and August 2020, Westbrook hacked into and gained unauthorized access into the public companies’ computer systems by resetting passwords of Office 365 email accounts belonging to senior level executives. In many instances, Westbrook is alleged by the SEC to have implemented auto-forwarding rules designed to automatically forward content from the corporate executives’ compromised email accounts to email accounts he controlled. As a result of these hacks, per the SEC, Westbrook deceptively obtained material nonpublic information that he then utilized to trade in the securities of the five public companies prior to the release of at least 14 earnings announcements. The SEC contends that Westbrook realized approximately $3.75 million in illegal profits from his insider trading in this hack-to-trade scheme.
The SEC’s insider trading enforcement action seeks a final judgment ordering Westbrook to pay civil penalties, to return his ill-gotten insider trading generated profits with prejudgment interest and enjoining him from committing future violations of the charged anti-fraud provisions of the federal securities laws.
As is often the case in hack-to-trade schemes, the federal criminal authorities also joined the fray, filing a criminal complaint against Westbrook in the District of New Jersey, charging him with securities fraud, wire fraud, and five counts of computer fraud.
David Chase, Esq. is a former SEC prosecutor who previously investigated and prosecuted insider trading cases for the SEC. He thus knows how the SEC investigates and prosecutes insider trading cases and under what circumstances it declines prosecution. For over the last twenty years, David, a SEC insider trading lawyer, has defended SEC insider trading cases around the nation. In many cases, he has secured successful results for his clients in which the SEC dropped its insider trading investigation without taking enforcement action. Please take a look at the “Recent Successful Results” section of his website. You may contact David toll-free at: 800-760-0912 for a free consultation or e-mail at: david@davidchaselaw.com, and can visit the Firm’s website for more information and content at: www.davidchaselaw.com.
