1 00:00:00,080 --> 00:00:03,000 Speaker 1: Now it's time for our daily Bloomberg Law Brief, exploring 2 00:00:03,080 --> 00:00:05,840 Speaker 1: legal issues in the news. Bloomberg lawhostjud Grasso speaks to 3 00:00:05,840 --> 00:00:10,160 Speaker 1: Bloomberg News reporter Christian Berthelsson about Chinese hackers who allegedly 4 00:00:10,320 --> 00:00:14,000 Speaker 1: made four billion dollars in illicit profits by breaching computers 5 00:00:14,000 --> 00:00:17,119 Speaker 1: of bainter Us law firms. Christian, it's a new twist 6 00:00:17,200 --> 00:00:20,440 Speaker 1: on insider trading where you don't have to actually know 7 00:00:20,560 --> 00:00:23,800 Speaker 1: and talk to an insider. How did they get into 8 00:00:23,840 --> 00:00:26,599 Speaker 1: the systems? Yeah, this is a sort of a new 9 00:00:26,680 --> 00:00:30,400 Speaker 1: twist on the insider trading prosecutions which we've seen a 10 00:00:30,440 --> 00:00:33,559 Speaker 1: lot of since the sort of end of the financial crisis. 11 00:00:33,760 --> 00:00:37,200 Speaker 1: In this case, the hackers seem to have started out 12 00:00:37,200 --> 00:00:42,560 Speaker 1: by stealing the log on information of law firm employees 13 00:00:42,720 --> 00:00:47,240 Speaker 1: at these elite transaction law firms and then using that 14 00:00:47,400 --> 00:00:51,600 Speaker 1: access to then place malware that would allow them continued 15 00:00:51,680 --> 00:00:55,960 Speaker 1: access to the system and to emails of partners that 16 00:00:56,040 --> 00:00:59,280 Speaker 1: we're working on the transaction. And in those emails they're 17 00:00:59,320 --> 00:01:03,520 Speaker 1: getting all the details of these transactions because that's what 18 00:01:03,600 --> 00:01:06,759 Speaker 1: the lawyers are talking about. It's correct, I mean these 19 00:01:07,120 --> 00:01:09,920 Speaker 1: in some cases, these were the partners who were directly 20 00:01:09,959 --> 00:01:14,160 Speaker 1: responsible for handling the legal work on the transactions. The 21 00:01:14,200 --> 00:01:17,720 Speaker 1: information at their disposal was incredibly detailed and of course 22 00:01:17,840 --> 00:01:21,360 Speaker 1: incredibly sensitive and and secret at the time, So it 23 00:01:21,440 --> 00:01:25,760 Speaker 1: gave these hackers a real bird's eye view into these 24 00:01:25,800 --> 00:01:28,240 Speaker 1: transactions and how they were pricing, and what the timing 25 00:01:28,319 --> 00:01:31,000 Speaker 1: was on them and that sort of thing. Um. Ultimately, 26 00:01:31,160 --> 00:01:35,000 Speaker 1: some of the transactions were not consummated, but it's it 27 00:01:35,120 --> 00:01:38,840 Speaker 1: appears from the charging documents that in nearly all cases 28 00:01:38,920 --> 00:01:41,720 Speaker 1: they still wound up making money on them, because you know, 29 00:01:41,760 --> 00:01:45,200 Speaker 1: there would be media reports that talks were in the works, 30 00:01:45,440 --> 00:01:49,160 Speaker 1: or in one case, another buyer swooped in and you know, 31 00:01:49,280 --> 00:01:52,600 Speaker 1: the transaction that was being contemplated didn't happen, but then 32 00:01:52,640 --> 00:01:55,440 Speaker 1: a second buyer came in, uh and took it over, 33 00:01:55,560 --> 00:01:58,160 Speaker 1: and so they still they still wound up making money. 34 00:01:58,360 --> 00:02:02,080 Speaker 1: Manhattan US attorney pre Berrara says the case of cyber 35 00:02:02,120 --> 00:02:05,200 Speaker 1: meat securities fraud should serve as a wake up call 36 00:02:05,320 --> 00:02:08,920 Speaker 1: for law firms around the world. So what will this 37 00:02:09,120 --> 00:02:13,000 Speaker 1: wake up call make them? Do? You know? It's one case. 38 00:02:13,120 --> 00:02:16,000 Speaker 1: I don't know if it's possible to generalize about the 39 00:02:16,639 --> 00:02:22,160 Speaker 1: quality of security practices at law firms sort of across 40 00:02:22,200 --> 00:02:26,480 Speaker 1: the industry, But I think any major law firms are 41 00:02:26,520 --> 00:02:28,720 Speaker 1: probably likely going to take a look at their own 42 00:02:28,760 --> 00:02:32,239 Speaker 1: systems and ensure that they've got sort of best practices 43 00:02:32,240 --> 00:02:36,799 Speaker 1: when it comes to maintaining top security practices. Bloomberg News 44 00:02:36,800 --> 00:02:40,080 Speaker 1: reporter Christian Berthelson speaking to Bloomberg Law host Jun Grosso. 45 00:02:40,240 --> 00:02:43,160 Speaker 1: You can listen to Bloomberg Law weekdays at one pm 46 00:02:43,240 --> 00:02:46,760 Speaker 1: most free time here on Bloomberg Radio Now. Among the 47 00:02:46,760 --> 00:02:49,480 Speaker 1: top legal stories from Bloomberg Law, the Securities and a 48 00:02:49,600 --> 00:02:51,920 Speaker 1: Change Commission has lost a battle over its use of 49 00:02:51,960 --> 00:02:55,200 Speaker 1: in house judges. A federal appeals court in Denver found 50 00:02:55,200 --> 00:02:58,800 Speaker 1: that using those judges is unconstitutional. The final say on 51 00:02:58,800 --> 00:03:01,720 Speaker 1: the sec judges may end up at the Supreme Court. 52 00:03:02,080 --> 00:03:05,600 Speaker 1: In Charleston, South Carolina, convicted church shooter Dylan Rufe won't 53 00:03:05,600 --> 00:03:08,200 Speaker 1: call any witnesses or present evidence in the death penalty 54 00:03:08,240 --> 00:03:11,359 Speaker 1: phase of his trial. Rufe is representing himself and was 55 00:03:11,400 --> 00:03:14,040 Speaker 1: found guilty of killing nine black church members in a 56 00:03:14,120 --> 00:03:18,120 Speaker 1: racially motivated attack. And that's this morning's Bloomberg Law Brief. 57 00:03:18,120 --> 00:03:20,600 Speaker 1: You can find more legal news at Bloomberg Law dot 58 00:03:20,600 --> 00:03:24,239 Speaker 1: com and Bloomberg Bienna dot com. Attorneys will find exceptional 59 00:03:24,320 --> 00:03:27,800 Speaker 1: legal research and business development tools there as well. Visit 60 00:03:27,840 --> 00:03:31,200 Speaker 1: Bloomberg Law dot com and Bloomberg Bienna dot com for 61 00:03:31,280 --> 00:03:32,239 Speaker 1: more information.