Internet-based insider trading

Internet-based insider trading

reports New security alliance Barbara Gengler Following a sudden increase of Internet attacks, eight Internet providers teamed up with Internet secur...

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reports

New security alliance Barbara Gengler Following a sudden increase of Internet attacks, eight Internet providers teamed up with Internet security firm ICSA.net to establish the Alliance for Internet Security to prevent denial-of-service attacks. The nine founding members have pledged to adopt security measures that will not only make it difficult to attack their computers but also prevent their systems from being used in an attack against others. Alliance members include Cable One, Cable & Wireless, Digex, Global Crossing and its US subsidiary Global Center, GTE Internetworking, Level 3, Sprint and Road Runner. The members recently thrashed out technical issues surrounding the recent Distributed Denial of Service (DDoS) Internet attacks that targeted Yahoo, eBay, Buy.com, Amazon.com and other Internet sites and set up guidelines for companies to protect against future attacks. Proposals include measures adding

additional layers of defence by reconfiguring routers and adding firewalls that make Web sites less susceptible to malicious hacks like denial-of-service attacks. Specific steps also include the denial of IP-directed broadcasts on perimeter routers. “The members of the Alliance have been working toward both short-term and long-term goals. DDoS attacks are a public health problem”, said Alliance Chair Peter Tippett. He also said the most recent meeting in March focused on corrective measures. Tippett said the members of the Alliance are coming forward to be part of the solution. As part of the effort, companies will implement appropriate security filtering technologies and work towards more

Internet-based insider trading Barbara Gengler The first federal Internet-based insider trading case has been filed alleging $8.4 million in profits by trading on 23 public stocks. The Securities and Exchange Commission (SEC) brought the civil fraud charges against 19 defendants, who from 1997 through January 2000, engaged in the widespread insider trading. The source of the inside information was a part-time word processor that was assigned to two Wall Street investment banking firms, Goldman Sachs and Credit Suisse First Boston. Also among the defendants are four principals or broker employees who traded on the inside information for their own accounts and the accounts of their clients. “The SEC and the criminal authorities have zero tolerance for inside trading,

which strikes at the integrity of our capital market”, said SEC director Richard Walker. He also said the SEC, the US Attorney and the FBI worked together to file the charges. “While this is the first time we have charged someone with using the Internet to share insider information, we remain on guard and seek to keep the Internet free from those who abuse it for personal gain”, Walker said. The defendants allegedly made more than $8 million in illegal profits over the past three years, trading in such companies as Wang Laboratories, Regal Cinemas Illinois Central Railroad, Medco Research and Fingerhut, each the target of a merger

fundamental, long-term solutions to protect against network attacks. Each member company must pledge to secure its own internal systems, add filtering technology to prevent spoofing or forging the source address of a piece of data and provide support for others to do the same. Additionally, the members will also encourage other companies and ISPs to join the Alliance. Harris Schwartz, director of security, Road Runner, said the members will provide support, education and information to help others accomplish the objectives. “This is about companies that are Internet-connected companies”, said Laurie Wagner, senior vice president of business development for ICSA.net. Wagner pointed out that the Alliance first needs to concentrate on the 5000 or so small Internet providers that might not know much about security. More than 600 companies have joined the Alliance. Members post the Alliance gold ribbon on their site to demonstrate their support for the guidelines. or acquisition on which Goldman Sachs or First Boston worked. The scheme began in mid-1997 when John Freeman, 34, was working as a temp at Goldman Sachs. He met insurance agent James Cooper, 41, and laser printing company executive Benton Erskine, 39, in an Internet chat room. The SEC alleges that, based on information provided by Freeman, the three architected and agreed on a plan to profit from any inside information Freeman could gather about merger and acquisition transactions being planned by Goldman Sachs’ clients. Freeman passed non-public information trading on tips of at least 13 deals, according to the SEC. He also paid off another First Boston temporary employee more than $5000 over the past year. Freeman, who pleaded guilty, also admitted to passing tips to investors in a chat room and neighbours and acquaintances. Cooper, who is charged with trading in 16 deals and earning more than $227 000, has also pleaded guilty. 7