The Securities and Exchange Commission charged an Estonian financial services firm and two of its employees with conducting a fraudulent scheme that allowed them to trade on information contained in press releases before they were released.

Specifically, the commission charged that the firm of Lohmus Haavel & Viisemann and two of its employees, Oliver Peek and Kristjan Lepik, committed electronic theft that allowed them to trade in advance of more than 360 confidential press releases issued by more than 200 U.S. public companies.

The SEC alleged that last June, Lohmus became a client of Business Wire, a disseminator of news releases and regulatory filings, “for the sole purpose of gaining access to Business Wire’s secure client website.” According to the commission, the defendants used a software program to obtain “unauthorized access to confidential information contained in impending nonpublic press releases of other Business Wire clients, including the expected time of issuance.”

By stealing press releases involving mergers, earnings, and regulatory actions, among other events, the defendants were able to time their trades, added the commission, and since January 2005 have made at least $7.8 million in illegal profits.

In response to the SEC’s request for emergency relief, the U.S. District Court for the Southern District of New York issued a temporary restraining order that froze the defendants’ assets and sought the repatriation of funds taken out of the country.

“Our action today demonstrates that we will seek out and stop securities fraud wherever we find it,” said Linda Chatman Thomsen, director of the commission’s Division of Enforcement. “We acted today to stop a clever and pernicious securities fraud and to preserve funds for investors,” added Daniel M. Hawke, associate district administrator of the commission’s Philadelphia District Office. “This case highlights that even when fraudsters invent new ways to violate the securities laws, the commission will track them down and stop them, wherever they are located.”

Business Wire president Cathy Tamraz told The Wall Street Journal that “there are blatant inaccuracies in the SEC’s complaint.” Tamraz reportedly denied that anyone had obtained confidential press releases.

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