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The Ultimate Hack - HFT Hedge Fund's Trades "Slowed Down" By Malicious Malware

Tyler Durden's picture




 

UPDATE: Sure enough, this was serious! *FBI, N.Y. POLICE ANNOUNCE FINANCIAL CYBER CRIMES TASK FORCE

Hacking Target... or The Pentagon... or Alcoa... or some Chinese military installation is all well and good; but mess with the US equity markets' mainstay market structure and it's getting serious. As BAE Systems reports, hackers slowed down high-speed trading at a large hedge fund last year and rerouted information about the company’s trades to offsite computers. The cyber-attack targeted the hedge fund’s trade order entry system and added gaps to the company’s trading algorithm - delaying orders by milliseconds. The hack went undetected for 8 weeks.  Though the hedge fund was not named, it is believed that 'organized crime' is behind the hack - ironic really...

 

As Bloomberg reports,

Hackers rerouted information about a hedge fund’s high-speed trades last year to offsite computers, a security official with BAE Systems Plc said.

 

The hackers sought out monetary gain, targeting the hedge fund’s trade order entry system and adding gaps to the company’s trading algorithm, Paul Henninger, global product director at BAE Systems Applied Intelligence, said in an interview.

 

The attack slowed down high-speed trading at the hedge fund, which BAE wouldn’t name.

 

“This is the first time we’ve seen criminals actively go after a business system and effectively take over that system and create sabotage,” said Paul Henninger, global product director for BAE Systems Applied Intelligence.

 

The attack was going on for eight weeks and BAE was called in by the company at the end of 2013, Henninger said.

 

“It has all the signatures of an organized crime attack,” he said.

 

  • *HACKERS PENETRATED A LARGE HEDGE FUND, BAE SYSTEMS TELLS CNBC
  • *BAE SAYS HACKERS STALLED HIGH-SPEED TRADES AT FUND: CNBC
  • *ATTACKS DELAYED TRADES BY MILLISECONDS, BAE'S HENNINGER SAYS
  • *HACKERS SAID TO SEEK MONETARY GAIN IN ATTACK ON HEDGE FUND: BAE
  • *HEDGE FUND HAD TRADING SLOWED BY HACKERS IN 2013, BAE SAYS
  • *HACKERS REROUTED HIGH-SPEED TRADING INFORMATION, BAE SAYS
  • *ATTACK ON HEDGE FUND WENT UNDETECTED FOR EIGHT WEEKS, BAE SAYS
  • *ORGANIZED CRIME SAID TO BE BEHIND HEDGE FUND HACKER ATTACK

 

What better way to crash a stock market than to hack the HFTs?

 

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Thu, 06/19/2014 - 11:16 | 4873776 order66
order66's picture

Awesome.

Thu, 06/19/2014 - 11:17 | 4873780 PartysOver
PartysOver's picture

Now that is rich.

Thu, 06/19/2014 - 11:20 | 4873798 gh0atrider
gh0atrider's picture

Good!  Root them, crash them...

Thu, 06/19/2014 - 11:23 | 4873809 Pool Shark
Pool Shark's picture

 

 

*ORGANIZED CRIME SAID TO BE BEHIND HEDGE FUND HACKER ATTACK

"Don't kid yourself Marty; it's not that organized."

http://www.youtube.com/watch?v=coDtzN6bXAM

Thu, 06/19/2014 - 11:28 | 4873823 maskone909
maskone909's picture

fellas, i dont know about you, but this feels like things are beggining to boil over. 

Thu, 06/19/2014 - 11:32 | 4873845 pods
pods's picture

It was just Time Warner throttling their bandwith after getting tired of all the HFT ping pong going on sucking up bandwidth.

pods

Thu, 06/19/2014 - 11:48 | 4873921 max2205
max2205's picture

What? Fish in wrappers is no longer effective

Thu, 06/19/2014 - 12:10 | 4873989 ACP
ACP's picture

Wait a minute, you mean to tell me the money we are robbing is being robbed? We went to all that trouble and someone is stealing from us?!

Thu, 06/19/2014 - 12:15 | 4874014 Pool Shark
Pool Shark's picture

 

 

"Bloody Pirates!!!"

http://www.youtube.com/watch?v=PE3K3Z13Uww

 

Thu, 06/19/2014 - 12:56 | 4874225 redpill
redpill's picture

Now you know how retail investors feel, fuckers!

Thu, 06/19/2014 - 13:35 | 4874428 WillyGroper
WillyGroper's picture

Since the market isn't rigged, just WTF is the problem?

Organized crime stealing from organized crime?

I repeat myself, just WTF is the problem?

Can you discern which one is which?

Thu, 06/19/2014 - 15:52 | 4875022 MagicHandPuppet
MagicHandPuppet's picture

I've alway hated (all) malware.... until now

Thu, 06/19/2014 - 15:53 | 4875023 MagicHandPuppet
MagicHandPuppet's picture

I heart anonymous

Thu, 06/19/2014 - 11:33 | 4873846 Divided States ...
Divided States of America's picture

I mentioned why nobody hasnt created some virus to destroy the structure of this integrity-less markets a few years ago. If HFT and algos are controlling the markets, then create a program that causes it to run haywire. It seems like this has become reality. Problem is, any stock market crash in the future maybe blamed on this and not because of economic fundamentals deteriorating or inflation running rampant.

 

Thu, 06/19/2014 - 12:08 | 4873916 Skateboarder
Skateboarder's picture

That's even more unbelievable than a bunch of cave-dwellers taking down big skyscrapers.

edit: Jesus, and so swallowable of a story for a world population accustomed to teevee stories, heroes, and villians. It's so obscene, it can't not happen.

Thu, 06/19/2014 - 12:29 | 4874073 optimator
optimator's picture

The next crash wil big'un, and the Little Guy will be locked out of trading while the 1% take their profts out.

Thu, 06/19/2014 - 11:33 | 4873850 Grande Tetons
Grande Tetons's picture

I felt that way last year.  TBTB seem to have an endless supply of assholes and rabbits. 

Thu, 06/19/2014 - 11:35 | 4873863 Jam Akin
Jam Akin's picture

One huge gaping asshole, infinite supply of rabbits.

Thu, 06/19/2014 - 11:38 | 4873889 Grande Tetons
Grande Tetons's picture

....so much for my Chocolate Doughnut today.

Thu, 06/19/2014 - 11:48 | 4873918 Bindar Dundat
Bindar Dundat's picture

Organized crime? You mean the Feds , don't you?

Thu, 06/19/2014 - 11:34 | 4873855 ebworthen
ebworthen's picture

Gives "ethical hacking" a new meaning.

Thu, 06/19/2014 - 12:16 | 4874019 KnuckleDragger-X
KnuckleDragger-X's picture

But isnt organized crime the ones running the HFT scheme?

Thu, 06/19/2014 - 12:17 | 4874024 DetectiveStern
DetectiveStern's picture

Fairly certain another HFT firm did it.

 

Be quicker, smarter or cheat remember.

Thu, 06/19/2014 - 14:58 | 4874791 Bunga Bunga
Bunga Bunga's picture

Fixed it for you:

*ORGANIZED CRIME SAID TO BE BEHIND HEDGE FUND

Thu, 06/19/2014 - 13:56 | 4874528 sgt_doom
sgt_doom's picture

No comment . . .

Thu, 06/19/2014 - 11:18 | 4873782 Pool Shark
Pool Shark's picture

 

 

For once the High Freaks had to trade just like us "little people."

HUZZAH!!!

 

Thu, 06/19/2014 - 12:40 | 4874116 cougar_w
cougar_w's picture

It's called "clearing the market"

http://madscienceunlimited.com/fiction/theexchange.html

She's bad, she's blue and she's stacked like a brick house. Meet Fortran, resident goddess and all-around party girl, here to rock your world and finally answer the question that's had everyone puzzled for years -- what exactly does a girl do with 4 trillion computational units, anyway?

Caution: Not intended for children or prudes. Contains adult situations, breaking and entering, nudity, casual destruction, advanced mathematics, open scorn of SEC and FCC regulations, violations of several well established laws of physics, and nudity.

Thu, 06/19/2014 - 11:17 | 4873785 Awakened Sheeple
Awakened Sheeple's picture

Ok guys. Which one of you did it?

Thu, 06/19/2014 - 11:38 | 4873882 Headbanger
Headbanger's picture

I can't tell you but I heard his initials are.. 

Thu, 06/19/2014 - 11:48 | 4873922 0b1knob
0b1knob's picture

It was John Galt who did the deed...

Thu, 06/19/2014 - 11:19 | 4873791 ISEEIT
ISEEIT's picture

'organized crime' is behind the hack .......

 

No shit? The USG hacked a HFT gangs system huh?

Must have been on somebodies shitlist.

Thu, 06/19/2014 - 11:19 | 4873794 Reaper
Reaper's picture

They call the pot, "organized" crime?

Thu, 06/19/2014 - 11:19 | 4873795 madbraz
madbraz's picture

The funny part is that the article associates the word "criminals" with hackers, instead of hedge funds and HFT.

Thu, 06/19/2014 - 11:24 | 4873814 sodbuster
sodbuster's picture

I thought the Fed and Wall Street, WERE the Organised Crime Syndicate.

Thu, 06/19/2014 - 11:19 | 4873796 vote_libertaria...
vote_libertarian_party's picture

What ever happened to that Russian programmer that took home that HFT code and was arrested...

Thu, 06/19/2014 - 11:32 | 4873843 JRobby
JRobby's picture

An assault on GS it was as I recall? He made the mistake of flying into EWR. He is detained indefinitely as an enemy combatant. You attack GOLDMAN, you are attacking the state.

Thu, 06/19/2014 - 11:32 | 4873844 disabledvet
disabledvet's picture

He got another job apparently.

Thu, 06/19/2014 - 11:20 | 4873800 Zerozen
Zerozen's picture

Hold on...wait...just a moment...

I'm busy looking for a microgram of a fuck to give for the plight of the HFT fund

Searching between the couch cushions now...

Thu, 06/19/2014 - 11:22 | 4873802 Oh regional Indian
Oh regional Indian's picture

Organized crime is at the heart of wall street, always has been. NYNY always stood for two things, Finance and Mafia.

They go well together, like an Apple and a Worm ;-)

Thu, 06/19/2014 - 11:21 | 4873803 dracos_ghost
dracos_ghost's picture

And how is this any different than IEX?

Thu, 06/19/2014 - 11:27 | 4873805 JenkinsLane
JenkinsLane's picture

Presumably, once this information permeates through the hacker community,

HFTs are going to come under sustained hacker attacks demanding ransoms.

After all, these guys have the most money to lose and the most money to pay.

Thu, 06/19/2014 - 11:46 | 4873914 Urban Redneck
Urban Redneck's picture

Or the high priests of the Kremlin could simply have the FSB pass the word-

fucking with the "little people" and their credit cards, as opposed to Western HFT/Banking interests is no longer an acceptable use of the benefit of the State's discretion in (non)enforcement of the cybercrime laws.

Thu, 06/19/2014 - 11:22 | 4873806 canonball
canonball's picture

Belgium did it

Thu, 06/19/2014 - 11:25 | 4873817 buzzsaw99
buzzsaw99's picture

organized crime = gollum sacks?

Thu, 06/19/2014 - 11:28 | 4873825 goldhedge
goldhedge's picture

Working for the NSA can be profitable.

Thu, 06/19/2014 - 11:28 | 4873828 The Duke of New...
The Duke of New York A No.1's picture

Let me guess; the Hedge Fund specialized in naked shorting Russian & Chinese CDS.

Thu, 06/19/2014 - 14:59 | 4874800 Bunga Bunga
Bunga Bunga's picture

Nope, just shorting your 401k.

Thu, 06/19/2014 - 11:29 | 4873831 buzzsaw99
buzzsaw99's picture

They got the money, hey

You know they got away

They headed down south and they're still running today

Singin' go on take the money and run...

Thu, 06/19/2014 - 11:31 | 4873839 ptoemmes
ptoemmes's picture

Organized Crime Terrorists - OCT - fixed it a bit.

Thu, 06/19/2014 - 11:35 | 4873866 ThisIsBob
ThisIsBob's picture

"Its a racket.  Those stock market guys are crooked."  (Al Capone)

Thu, 06/19/2014 - 11:35 | 4873867 atomp
atomp's picture

"The irony was overwhelming."

Thu, 06/19/2014 - 11:37 | 4873877 cocky roach
cocky roach's picture

Oh no! Organized crime is going after organized crime! Run people!

Thu, 06/19/2014 - 11:38 | 4873884 Yen Cross
Yen Cross's picture

        Give's a whole new meaning to the term "Good Fellas".

Thu, 06/19/2014 - 11:38 | 4873885 Typing Typer
Typing Typer's picture

Hacking the hackers. What's good for the goose....

Thu, 06/19/2014 - 11:41 | 4873895 BuddyEffed
BuddyEffed's picture

“It has all the signatures of an organized crime attack,” he said.

 

Haven't the recent revelations, made many wonder whether the whole HFT thing could almost be characterized as organized crime or front running of the numbers racket?
Thu, 06/19/2014 - 11:41 | 4873899 chinaboy
chinaboy's picture

Bots control the market. Hackers control bots. Makes a lot of sense. And serious fun starts.

Thu, 06/19/2014 - 11:48 | 4873917 Grande Tetons
Grande Tetons's picture

Which is why I can not touch crypto...even though I like many of the merits. I just know one day a smart little weasel will fuck me out of my moolah. Kinda like the Fed. 

Thu, 06/19/2014 - 14:27 | 4874635 shitco.in
shitco.in's picture

Crypto is backed up by SHA-256 (I won't get into the details but it is actually much more complex because everything is encrypted multiple times), which is the backbone of our governments communication systems.  If that were to be hacked there would be many more problems than bitcoin "crashing".  

For some great cryptography education, check this out: https://class.coursera.org/crypto-010/

 

 

Fri, 06/20/2014 - 00:53 | 4876992 ForTheWorld
ForTheWorld's picture

"Crypto" isn't simply "backed up" by a hashing algorithm, and "Crypto" isn't something that has come along with Bitcoin (which, based on your mention of Bitcoin "crashing" even though the comment you replied to didn't mention it, seems to be how you've come to hear of "Crypto").

You should probably go to Bletchley Park if you want to learn about modern cryptography.

Thu, 06/19/2014 - 11:46 | 4873911 alien-IQ
alien-IQ's picture

whoever did the actually deserves a medal.

Thu, 06/19/2014 - 11:48 | 4873919 Emergency Ward
Emergency Ward's picture

"Somebody hoodooed the hoodoo man"

Junior Wells -- "Hoodoo Man Blues"

Thu, 06/19/2014 - 11:48 | 4873920 Atomizer
Atomizer's picture

This has all the prime ingredients for a new flash crash. 

Thu, 06/19/2014 - 11:52 | 4873931 Chippewa Partners
Chippewa Partners's picture

Maybe it was Heidi Cruz's client?  Ted might be upset.

 

Thu, 06/19/2014 - 11:55 | 4873940 icanhasbailout
icanhasbailout's picture

 

“This is the first time we’ve seen criminals actively go after a business system and effectively take over that system and create sabotage,” said Paul Henninger, global product director for BAE Systems Applied Intelligence.

 

and they pay him big bucks to be completely fucking ignorant of shit that's been going on for two decades now

Thu, 06/19/2014 - 12:05 | 4873979 Skateboarder
Skateboarder's picture

Cross-exchange fractal HFTs are background noise. Bid > Ask? No Problem. We've got plenty more where that came from.

Paul Henninger knows exactly what he is allowed to say. Can't be part of the real dealio if you go squealio.

Thu, 06/19/2014 - 12:08 | 4873987 RaceToTheBottom
RaceToTheBottom's picture

It wasn't organized crime, it was a sub division of the HFT firms.

Oh, I guess that makes it organized crime, doesn't it?

Thu, 06/19/2014 - 12:16 | 4874023 Perfecthedge
Perfecthedge's picture

Thieves stealing from thieves is no crime.  It is an honorable act.  Almost like Robin Hood and his crew.  I approve this.

Thu, 06/19/2014 - 12:27 | 4874067 potato
potato's picture

fbi, marshalls, coast goard will be all over this. "national security" and such

Thu, 06/19/2014 - 12:32 | 4874084 yellowsub
yellowsub's picture

Funny, I thought the sabotage was from the HFT firms...

Thu, 06/19/2014 - 12:38 | 4874110 waterhorse
waterhorse's picture

In the words of Nelson, "Ha ha."

Thu, 06/19/2014 - 12:45 | 4874144 Joebloinvestor
Joebloinvestor's picture

Turnabout is fair play.

Thu, 06/19/2014 - 12:52 | 4874190 Bemused Observer
Bemused Observer's picture

Ha ha, the hackers are getting better and better...

Something TPTB should keep in mind is that a lot of hackers aren't necessarily after the money...it's the CHALLENGE.
Which basically means you're dealing with a lot of "true believers", who are always harder to stop than the strictly greedy.

Thu, 06/19/2014 - 12:55 | 4874223 Itch
Itch's picture

"This is the first time we’ve seen criminals actively go after a business system"

 

Business system!!!! LO - MOTHERFUCKING - L

Thu, 06/19/2014 - 13:48 | 4874497 pakled
pakled's picture

Irony is as irony does.

Thu, 06/19/2014 - 14:07 | 4874562 Lugnut
Lugnut's picture

One man's 'sabotage' is another mans 'fair and equitable market'

Thu, 06/19/2014 - 14:23 | 4874611 Conax
Conax's picture

Live by the silicon diode, die by the silicon diode.

I really love this story,  let the HFT raiders squeal like pigs.

 

Thu, 06/19/2014 - 14:26 | 4874625 orangegeek
orangegeek's picture

And the culprit was the HFT's competitor - another HFT.

Thu, 06/19/2014 - 15:11 | 4874850 sasebo
sasebo's picture

I keep waiting for them to hack the fed, goldman & jp. What the fuck are they waiting on?

Thu, 06/19/2014 - 15:56 | 4875044 NoWayJose
NoWayJose's picture

So the attack lasted 8 weeks?  It probably wasn't found until the accountants checked and found a day where the hedge fund actually LOST money...

Thu, 06/19/2014 - 16:01 | 4875066 NoWayJose
NoWayJose's picture

So, now the little guy is looking at market where news and government reports are selectively sent out prior to release, and where exchanges are allowing front running by HFTs, where orders don't go to get the best price, and where hackers are hacking into HFTs who are hacking into market makers who are hacking into exchanges.

Thu, 06/19/2014 - 16:55 | 4875245 Smiley
Smiley's picture

Stuxnet the pricks.

Thu, 06/19/2014 - 18:25 | 4875523 trx
trx's picture

 

I don't think this malware is developed by any ordinary hacker. It takes en unusual amount of knowledge to make this work as described.

Just penetrating the system is probably the easiest step - you just need a few top secret government crypto keys...

But changing the programs, the algorithms, in a way that makes it possible to "milk" the fund for eight weeks without anyone noticing?! To do that you'll need a lot of inside information about the system.

The only people I know of who is able to do that is currently working at a handful of HFT-labs run by a few major banks. 

 

Sun, 06/22/2014 - 15:08 | 4883342 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

"Hackers" n' 'criminals' n' 'organized crime', oh my!

 

Am I the only one that figures the establishment is setting up a straw man argument to foist upon us when the global economy

finally blows up again due to the delay imposed on the 2008

implosion that wiped out the entire global banking system and their proxy insurance companies?

NOTE: March 10th 2008 at 11:00am Bear Stearns time was

          the official END of the world as you know it. One does

          NOT need to be a Quantum Physicist to understand this.

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