
Hedge funds listened to Bank of England briefings a few seconds earlier - hhs
https://www.theguardian.com/business/2019/dec/19/hedge-funds-hacked-into-bank-of-england-briefings
======
spzb
Suggestion that this is related to BoE downsizing their cyber security
department : [https://www.theguardian.com/business/2019/dec/21/bank-of-
eng...](https://www.theguardian.com/business/2019/dec/21/bank-of-england-
audio-leak-followed-loss-of-key-cybersecurity-staff)

Also, more coherent version of the main story than OP :
[https://www.theguardian.com/business/2019/dec/19/hedge-
funds...](https://www.theguardian.com/business/2019/dec/19/hedge-funds-hacked-
into-bank-of-england-briefings)

~~~
hhs
Useful, thanks. The FT also offered a good analysis this morning. If
interested, it’s here:
[https://www.ft.com/content/e5e1daea-21f6-11ea-92da-f0c92e957...](https://www.ft.com/content/e5e1daea-21f6-11ea-92da-f0c92e957a96).

~~~
neonate
[http://archive.md/qSbWL](http://archive.md/qSbWL)

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rla3rd
not hacking. having access to an audio feed over a video feed that requires
buffering is hardly news. kudos to whoever realized that you could get the
information faster over audio when the information was released at the same
time across both channels.

~~~
gruez
>kudos to whoever realized that you could get the information faster over
audio when the information was released at the same time across both channels.

According to the article, the audio feed was a backup, and a third party
supplier misused it. It definitely wasn't someone "realizing" that there was a
public audio feed with a lower delay.

>the Bank confirmed that a third party supplier “misused” an audio feed of
certain of the Bank press conferences since earlier this year. The audio was
installed to serve as a back-up in case the video failed.

~~~
Redoubts
What does a “backup” mean, really? When a site posts multiple links to a
stream, latter ones are “backups” but I’m not forbidden from using them. Most
of the time, backups are just less good alternatives. Ostensibly, a non-video
stream should fit the bill...

~~~
gruez
>When a site posts multiple links to a stream, latter ones are “backups” but
I’m not forbidden from using them.

That analogy only works if the BOE makes both streams available on a public
basis. If the company is contracted only to provide a backup stream in case
the primary failed, it stands to reason that they do not have the rights to
stream/broadcast during normal circumstances. From a legal standpoint, it
would be similar to eavesdropping on the live press conference using a bug.

~~~
mentat
It's a public press conference, you can't eavesdrop on it.

~~~
gruez
Presumably it's not the type of press conference where the announcement in
made in front of multiple journalists and news station cameras. If it was,
well... I doubt banks would be paying £2,500-£5,000 (as claimed by the
guardian) because they could just send an intern with a microphone for less.

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baby
One thing that I find really weird is that insider trading is virtually
impossible to prevent.

Knowing this, what should we do? Create a system where insider trading has
negligible effects? Or try to attack it as much as possible?

~~~
somebodythere
I'm still confused as to who is actually harmed by insider trading. Can
someone explain?

~~~
will4274
The people who don't have insider information. When you adjust for the value
actually created by a company, the stock market is a zero sum game. Insider
trading moves profit allocation from evenly divided among shareholders to an
uneven allocation where shareholders with inside information earn a greater
than owed share of the upside.

~~~
alasdair_
>When you adjust for the value actually created by a company, the stock market
is a zero sum game.

Not really. For example: if I am a terminal cancer patient that wants
liquidity _now_ to do the things I want to do before I die, and you are a
pension fund that only really cares about the return thirty years from now, I
can trade the stock that I have to you in exchange for money I can spend right
now at a price both of us agree on and (this is the important bit) BOTH of us
gain from the transaction.

~~~
clort
The terminal cancer patient and the pension fund are not the entire field of
shareholders. Your scenario does not contradict the idea of a zero sum game
for the whole stockholdings of a company, or the stockmarket as a whole.

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detaro
Misleading headline, no "hacking" going on, instead a supplier selling access
to a feed they shouldn't have been giving out to others.

~~~
justinjlynn
Oh, so, just standard non-cyber crime then. Seems like such things should be
tagged.

~~~
jshaqaw
Unclear to me if it's a crime. I haven't seen anyone say this usage was
explicitly banned in the BoE contract. If not, it was certainly sleazy by the
vendor but more a failure of the BoE to properly vet and draft agreements then
a crime.

~~~
NedIsakoff
The issue is did anyone trade based on the information. Then it would be
considered insider trading.

For example, lets say that you work at Apple. Walking down the hallway one day
you see Tim Cook trip and fall on the way to the lunch area. The fall is
really bad and he is unconscious and bleeding heavily. If you immediately sell
your Apple stocks based on that, that would be insider trading.

~~~
wutbrodo
This is because you work at Apple, and are thus privy to info like that. The
hedge funds who would've traded aren't insiders, so a better analogy would be
a non-Apple-employee seeing Tim Cook trip and fall somewhere in Cupertino and
then buying Apple puts.

The information shouldn't have been leaked, but if it wasn't illegal to do so,
then I don't see how the funds who traded on the info could be liable in any
way.

~~~
gruez
>would be a non-Apple-employee seeing Tim Cook trip and fall somewhere in
Cupertino and then buying Apple puts.

this isn't really a good analogy either, because the people who got
"discovered" the information had no relationship with Cook or Apple. In this
case, the company who's providing the information had a relationship with the
BOE because they were contracted to provide the stream.

>The information shouldn't have been leaked, but if it wasn't illegal to do
so, then I don't see how the funds who traded on the info could be liable in
any way.

depends on the jurisdiction:

>In the United States and many other jurisdictions, however, "insiders" are
not just limited to corporate officials and major shareholders where illegal
insider trading is concerned but can include any individual who trades shares
based on material non-public information in violation of some duty of trust.
This duty may be imputed; for example, in many jurisdictions, in cases of
where a corporate insider "tips" a friend about non-public information likely
to have an effect on the company's share price, the duty the corporate insider
owes the company is now imputed to the friend and the friend violates a duty
to the company if he trades on the basis of this information.

[https://en.wikipedia.org/wiki/Insider_trading](https://en.wikipedia.org/wiki/Insider_trading)

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chaz6
The title is a little misleading. What actually happened was that one of BoE's
suppliers was surrepticiously selling access to an audio feed which was 8
seconds ahead of the video which was intended to be a backup in case the video
feed failed.

~~~
dang
We've taken a crack at a better title above. If someone can suggest a better
one, we can change it again.

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IanCal
Is this automatically generated? The first five paragraphs say the same thing
with slightly different wording.

~~~
LeftHandPath
It’s possible and likely. A lot of financial news outlets use software to
automatically describe market movements and the intra-day movements of single
stocks.

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jbverschoor
In a way, hackable information is also public information

~~~
betamoo
That’s equivalent to saying ‘If I can steal your car then the car is free.’
Keep in mind the definition of ‘public’ is not merely that it’s accessible but
also that the greater public has access and time to consume the information
that could affect the stock price.

~~~
jshaqaw
In the US insider trading law is that information must not only be made public
but have reasonable time to be disseminated. What exactly that means in the
era of text parsing quantbots is unclear but it is the law.

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NedIsakoff
The article doesn't say so and I haven't found an explanation. Why was the
audio only feed 8 seconds faster then the video feed? Why is this time
difference needed?

~~~
andylynch
In earlier reports, it was mentioned that the extra time is due to the
compression and processing of the video stream.

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NedIsakoff
In that case, why not delay both?

~~~
detaro
Because it was a backup feed that was not supposed to be accessed by anyone
unless the video feed failed, so it shouldn't matter if it is delayed or not.

