The computer network that runs the Nasdaq Stock Market has been penetrated by hackers multiple times during the past year, according to a newspaper report.
The intrusions did not affect Nasdaq’s stock trading systems and no customer data was compromised, Nasdaq OMX Group Inc. said Saturday. Nasdaq is the largest electronic securities trading market in the U.S., with more than 2,800 listed companies.
A federal official told The Associated Press that the hackers broke into the service repeatedly over more than a year. Investigators are trying to identify the hackers, the official said. The motive is unknown. The official spoke on condition of anonymity because the inquiry by the FBI and Secret Service is continuing.
The targeted service, Directors Desk, helps companies share documents with directors between scheduled board meetings. It also allows online discussions and Web conferencing within a board. Since board directors have access to information at the highest level of a company, penetrating the service could be of great value for insider trading.
Nasdaq OMX spokesman Frank DeMaria said the Justice Department had requested that the company keep silent about the intrusion until at least Feb. 14. However, The Wall Street Journal reported the investigation on its website late Friday, prompting Nasdaq to issue a statement and notify its customers.
DeMaria said Nasdaq OMX detected “suspicious files” during a regular security scan on U.S. servers unrelated to its trading systems and determined that Directors Desk was potentially affected. It pulled in forensic firms and federal law enforcement for an investigation. They found no evidence that customer information was accessed by hackers.
Rich Mogull, an analyst and CEO with the security research firm Securosis, said Web-accessible services like Directors Desk are a prime target for hackers, and have sometimes been a back door for systems that aren’t directly connected to the Web. The presence of files on the Directors Desk system and the claim that no customer information was compromised could indicate that hackers were able to get in but not complete their attack, he said.
Computer security experts have long warned that many companies aren’t doing enough to protect sensitive data, and recent events have underlined the point. The secret-spilling organization WikiLeaks has published confidential documents from banks in Switzerland and Iceland and claims to have incriminating documents from a major U.S. bank, possibly Bank of America.
In 1999, hackers infiltrated the websites of Nasdaq and the American Stock Exchange leaving taunting messages, but Nasdaq officials said then that there was no evidence the break-ins affected financial data.
Nasdaq OMX CEO Bob Greifeld said in a statement that cyber attacks against corporations and government are constant and the company is vigilant in maintaining security.
“We continue to evaluate and enhance our advanced security controls to respond to the ever increasing global cyber threat and continue to devote extensive resources to further secure our systems,” he said.
Some of the Wall Street’s technological scares have been unrelated to hackers. In June 2009, a computer glitch knocked out trading in 242 stocks on the New York Stock Exchange for several hours.
More recently, high-speed trading software precipitated a “flash crash” on May 6. One trade worth $4.1 billion touched off a chain of events that ended with 30 stocks listed in the S&P 500 index falling at least 10 percent within five minutes. The drop briefly wiped out $1 trillion in market value as some stocks traded as low as a penny.
“Looking around”
“So far, [the perpetrators] appear to have just been looking around,” said one person involved in the Nasdaq matter.
People familiar with the investigation say the exchange’s trading platform, the system which executes trades, was not compromised, according to the report.
“Investigators are considering a range of possible motives, including unlawful financial gain, theft of trade secrets and a national-security threat designed to damage the exchange,” the Journal wrote.
“Many sophisticated hackers don’t immediately try to monetize the situation; they oftentimes do what’s called local information gathering, almost like collecting intelligence, to ascertain what would be the best way in the long term to monetize their presence,” Tom Kellermann, a former computer security official at the World Bank who now works at a firm called Core Security Technologies, told the Journal.
The Secret Service initiated the probe involving New York-based Nasdaq OMX Group Inc. last year. The FBI is also investigating the breach and White House officials have been informed.
Investigators have not yet been able to track the cyber break-ins to any specific individual or country, but people with knowledge of the case told the newspaper some evidence points to Russia. However, they point out that hackers could be just using Russia as a conduit.
In 1999, a group of hackers calling itself “United Loan Gunmen” infiltrated the computer that runs the websites for Nasdaq and the American Stock Exchange.
The hackers left a taunting message and also claimed to have briefly created for itself an e-mail account on Nasdaq’s computer system, suggesting a broader breach in security. But at the time, Nasdaq officials said there was no evidence they manipulated financial data.
Read the full Wall Street Journal report here.
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