Spidering for Fun and Profit — and Why Traders Don’t Read

There is an interesting story out about the SEC charging a Estonian investment bank with front-running news on Business Wire. According to the SEC, two employees had their firm join Business Wire, then they used a “software spider” to obtain access to confidential information, including “nonpublic press releases of other other Business Wire clients”, including the time that such releases would be issued.

How did they do on their front-running scheme? About $7.8-mm in profits since January 2005 by tading around 360 confidential press releases.

Interestingly, Business Wire itself says that the SEC story is inaccurate. Almost certainly splitting technical hairs, it claims that Business Wire’s main news system was not compromised. Instead, here is what it says happened:

Certain individuals gained access to a screen shot of limited background information. This information did not include the content of news releases.

I’m guessing this means that there is a central admin screen somewhere in the system where Business Wire staff manage upcoming press releases, and where you can see the issuer and the intended headline. That must have been what the Estonian hackers accessed, which is interesting in that it reinforces something I was saying at lunch earlier this week with a money manager: Traders only read headlines. The rest of a news story is wasted on them.


  1. the reason why traders don’t read press releases carefully is because press releases are a joke. Saying “company x to acquire company y for $x per share” usually takes 2 pages.
    the press release is written by a PR person, whose primary contribution is familiarity with the convoluted practices of PR writing, which were probably invented to create job security, because no one would write like that unless it was a requirement.
    the PR team never understands the business and prefers to rely on cliches to describe things (“best in class”, “innovative”), which are then proofed by lawyers, who further strip it of meaning.
    not to mention the documents are full of phony quotes from management that either reiterate points that are generally obvious, or are basically rah-rah sentiments.