IT guy admits to insider trading hack

The IT guy accused of hacking into an online investment advice service to get early access to its forthcoming stock picks, and then trading ahead of those recommendations, pled guilty to securities fraud.

According to the U.S. attorney’s office for the Southern District of New York, David Stone, an Idaho-based tech worker, pled guilty to one count of securities fraud in connection to a scheme that involved gaining unauthorized access to the Motley Fool’s stock recommendation service and misappropriating its recommendations before they were publicly released.

U.S. authorities alleged that Stone traded ahead of those recommendations, generating at least US$3.5 million in illicit trading profits — and that he also tipped off at least one other person who made US$2.7 million in illegal profits too.

A parallel action filed by the U.S. Securities and Exchange Commission (SEC) in the case alleged that the scheme netted US$12 million in total profits, as others also traded on the information.

Stone, who was arrested and charged back in May, is now scheduled to be sentenced in February 2023.

“David Stone admitted in court today that he unlawfully accessed pre-publication stock picks from an investment advice service so that he could beat the markets and generate millions in trading profits for himself,” said Damian Williams, U.S. attorney for the southern district.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.