US hedge funds have been under stealthy attacks from cyber-criminals intent on intercepting trading strategies in order to profit from front-running and other illicit maneuvers.
By Mark Clayton, Staff writer JUNE 21, 2014
For about two years, US hedge funds have been under stealthy attacks from cyber-criminals intent on intercepting trading strategies in order to profit from front-running and other illicit maneuvers, cyber-security experts say.
That hidden cyber-crime trend was highlighted Thursday when an unnamed US-based hedge fund was reported to have been hacked and its stream of high-speed trade data intercepted by cyber-criminals. They, in turn, apparently used the data to make their own trades first, according to a British cyber-security company.
The criminals inserted malware onto the hedge fund trading system platform that in turn caused an almost imperceptible microsecond or two delay to each of the speedy trades – enough to allow the criminals to do their own trading ahead of the company, BAE Systems Applied Intelligence experts said.
"It's pretty amazing," Paul Henninger, global product director at BAE Systems, told CNBC, which first reported the attack. "The level of business sophistication involved as opposed to technical sophistication involved was something we had not seen before."