FIN4 May Have Embarked on a Risky Hacking/Insider Trading Strategy
Posted in Data Security

I haven’t yet turned to a life of crime, so far be it from me to criticize actual criminals’ profit-maximizing strategies. It’s easy for me to nitpick, but I’m not the one strapping on my mask and trying to earn a (dis)honest dollar every day. But have a look at this Reuters story from Tuesday. 

In it, we learn that the SEC and the Secret Service are investigating a sophisticated computer hacking group known as “FIN4” that allegedly “has tried to hack into email accounts at more than 100 companies, looking for confidential information on mergers and other market-moving events. The targets include more than 60 listed companies in biotechnology and other healthcare-related fields, such as medical instruments, hospital equipment and drugs.” Apparently their plan is to harvest this information and then trade on it. Nobody knows where FIN4 is from. They could be overseas, but supposedly their English is flawless and they have a deep knowledge of how financial markets work, so maybe they’re in the United States.  At one level, a little terrifying!

But this group hasn’t devised a complex, superpowered algorithm to steal information. Instead, it’s allegedly stealing information the (sort of) old fashioned way: through social engineering. The Reuters story explains that FIN4 “used fake Microsoft Outlook login pages to trick attorneys, executives and consultants into surrendering their user names and passwords.” In at least one case, “the hackers used a confidential document, containing significant information that they had already procured, to entice people discussing that matter into giving their email credentials.”

I have two main thoughts.  First, sound information handling practices, and appropriate wariness among professionals using email, still go a long way toward securing confidential data within organizations. It’s often not the most technologically advanced tactics that yield the worst data breaches. Second, FIN4 has embarked on a complex money-making plan. There may be many uses of this information, but one of them seems to be trading securities in the public markets. That’s not as simple as it seems. If you’re doing that, you’re on the grid and can’t really hide. FINRA sees all of those trades and it isn’t that hard for regulators to find out who is making them. When the Consolidated Audit Trail comes online,* it will be substantially easier and faster. In the meantime, broker-dealers are obligated to identify who their customers are. If those people have electronic connections to the ones involved in the hacking, those links could be enough for the SEC to get an asset freeze before profits are siphoned overseas. 

What FIN4 is allegedly doing is scary, but they haven’t yet built a criminal ATM.

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