A Maltese financial services company is one of those at the centre of a US investigation into a $100 million hacking and trading scam which investigators are dubbing “one of the biggest cases of its kind”.
A copy of the complaint filed by the US Security and Exchange Commission on Monday, seen by this newspaper, lists Maltese trading firm Exante Ltd as one of 15 companies under investigation.
The SEC, a federal agency tasked with maintaining fair stock markets, is claiming the companies, mostly based in the US, utilised leaked company earnings reports from a Ukrainian hacking network between 2010 and 2015 which raked in millions of Euros in “ill-gotten gains”.
In all, American investigators believe Exante could have made in excess of $24 million through the scam in the past five years.
The company’s head of trading, George Grech, declined to comment but said he stood by a statement issued on the company’s website.
The statement said Exante disputed the allegations made against it by the SEC and intended to defend its reputation rigorously.
It added that it would be fully cooperative with all relevant authorities and had already been in contact with the Maltese regulators. The SEC, meanwhile, detailed how Exante and the other involved companies “frequently made illicit trades” to manipulate the market.
The 61-page court application claims that between 2010 and as recently as May this year, the companies gained early access to more than 150,000 press releases containing earnings figures and other corporate information.
The companies then allegedly used many of these documents to make trades before the information was published, exploiting a time gap which gave them an unfair advantage on the stock exchange.
Among the nine people already indicted were Ukrainian hackers, who are charged with stealing sensitive information.
The prosecutors said the hackers were given “shopping lists” of press releases by the traders, paying them a portion of the profits for their services.
The filing of the court charges prompted a series of press conferences by US heavyweights, including US Secretary of Homeland Security Jeh Johnson, who said US authorities would exhaust every possible avenue to continue to expose the scam.
FBI assistant director Diego Rodriguez described the con as “traditional securities fraud with a twist – one that employed a contemporary approach to a conventional crime”.
The SEC, on the other hand, described Exante as “a Malta-based hedge fund”, a claim denied by the company, which insists it has never operated as a hedge fund. Despite being based in the Portomaso complex in St Julians, the company’s directors are all Russian and Latvian. Three of them own property in Malta.
Last year Parliamentary Secretary José Herrera visited the company and praised its performance. Malta, he said, was “proud to host firms like this”.
He also congratulated Exante on “incredible growth in assets and revenue” exceeding 1,000 per cent, but assured that the island’s sound regulators made Malta a reliable centre for the financial services industry.