Title: Moscow-Based Businessman Vladislav Klyushin Sentenced to Nine Years in Prison for Insider Trading Scheme Involving Stolen U.S. Earnings Data

Background

Vladislav Klyushin, a Moscow-based businessman with ties to the Kremlin, was sentenced to nine years in prison on Thursday for his role in a $100 million insider trading scheme involving illegally obtained earnings information stolen through hacking of U.S. computer networks.

Trial and Conviction

Klyushin, 42, was found guilty of wire fraud and securities fraud in a two-week trial in Boston Federal Court.
He has been detained in the U.S. since his arrest in Switzerland in 2021 and is expected to be deported to Russia upon completion of his sentence.

Insider Trading Scheme

Klyushin is accused of personally making approximately $33 million through the scheme, which involved acquiring earnings-related reports for over 300 companies before they were made public.
The hacked data enabled Klyushin to trade stocks on insider information.
Companies targeted included Microsoft and Tesla.

Companies Involved and Clients

Klyushin’s IT company, which was a supposed provider of penetration testing services for computer systems, had clients such as the administration of Russian President Vladimir Putin and the Ministry of Defense.

Alleged Co-Conspirators and Suspects

Four suspects, including a Russian military intelligence officer, allegedly involved in the scheme remain at large.
Klyushin’s close friend and alleged co-conspirator, Ivan Ermakov, is a Russian military intelligence officer who was among 12 Russians charged with hacking into the Democratic National Committee and other democratic organizations in 2018.

Hacking and Profits

The defendants successfully hacked into two major U.S. vendors used by publicly traded corporations to submit filings to the Securities and Exchange Commission (SEC).
They obtained insider information and used this illicit intelligence to make substantial trading profits by buying shares of companies with positive financial results or selling shares in companies with poor financial reports.

Defense and Sentencing

U.S. Assistant District Attorney Seth Kosto petitioned for a 14-year prison term, emphasizing the importance of a substantial punishment to serve as a deterrent for cybercriminals.
Defense attorney, Maksim Nemtsev pleaded for leniency, citing Klyushin’s lack of criminal history and significant personal sacrifices, such as months of solitary confinement while awaiting extradition and the financial losses sustained by his company.

Extradition and Challenges

There is little likelihood of the extradition of the other suspects, due to diplomatic complexities between the two countries.