Did Heartland Payment Systems CEO Make Insider Stock Trades?
{image}
Did Heartland Payment Systems CEO Make Insider Stock Trades?
Free Online Articles Directory
AB Answers
0 && $ .browser.msie ) {
var ie_version = parseInt($ .browser.version);
via
Hello
Password
Lost ?
Home Page > Finance > Investing > Did Heartland Payment Systems CEO Make Insider Stock Trades?
Did Heartland Payment Systems CEO Make Insider Stock Trades?
Edit Article |
Posted: Jan 31, 2009 |Comments: 1
| Views: 370 |
Heartland Payment Systems (HPY) and Federal investigators have released more details about the technical nature of the massive financial data breach made public last week, but have refused to pinpoint the exact date that Heartland first became aware there may have been a problem with their network security.
The date they settle on may well be the difference between market serendipity and an SEC investigation for insider trading, as an examination of stock sales made by Heartland CEO Robert O. Carr in the second half of 2008 raises some serious questions about just who knew what and when in the latest version of the worst-ever information security breach which has now spawned a class action lawsuit.
Federal investigators and the Secret Service have apparently traced the Heartland data breach to sources outside of North America, with some reports indicating Eastern Europe as being the most likely origin of the unauthorized access.
The principles and methods used by the perpetrator(s) have been uncovered, with evidence that is somewhat contradictory in nature, some of which is suspected of being nothing more than red haring planted by the hacker(s) to throw investigators off their trail.
More from Evan Schuman:
The sniffer malware that surreptitiously siphoned tons of payment card data from card processor Heartland Payment Systems hid in an unallocated portion of a server’s disk. The malware, which was ultimately detected courtesy of a trail of temp files, was hidden so well that it eluded two different teams of forensic investigators brought in to find it after fraud alerts went off at both Visa (V) and MasterCard (US:MA) according to Heartland CFO Robert Baldwin.
“A significant portion of the sophistication of the attack was in the cloaking,” Baldwin said.
Another consultant-who also wanted his name left out-said the ability to write directly to specific disk sectors is frightening. “Somehow, these guys went directly to the base level of the machine (to an area) that was not part of the file table for the disk,” he said. “Somehow, they got around the operating system. That’s a scary mother in and of itself.”
Other industry brains were less impressed. One nationally recognized and certified information security expert who I corresponded with Wednesday evening regarding the breach indicated that the hackers exploited a system weakness that should have been well known to Heartland, for which protocols issued several years ago.
From my email conversation:
“This was an ‘I told you so’ moment for me. I know exactly which part of the process got hit. It was the un-encrypted Point-to-Point connection which occurs between the Host Security Module (HSM) and the Application Security Module (ASM).
“But that means that they had to have had a hole in their firewall to insert the sniffer into unallocated disk space. “
“Now Heartland is crying poor me, and the making it sound like they are heroes by claiming that they are going to ‘develop’ end to end encryption. They should have been using the ISO Banking Security Standards which were promulgated in 2004/2005. They should be expected to uphold the standard.”
It looks as if the techies have already dissected the mechanics of this modern day cyber-cat-burglar, but ten days later we still have no clear idea of how long the sensitive data was exposed or when Carr and other Heartland executives first had an indication that something was not as it should be.
More from Evan Schuman:
Heartland CFO Robert) Baldwin also added more details to the sketchy timeframes that have been revealed thus far about the attacks, specifying that Heartland was contacted by Visa and MasterCard “in very late October,” possibly October 28.
Given that authorities are conducting an investigation, it is understandable that many details will not be released until after an arrest is made, but given the nature of the details that have and have not been revealed, one has to wonder who all is actually under investigation here.
Usually in an on-going criminal investigation, details are withheld from the press and public for many different reasons, but generally it is the mechanistic details of the crime, and often all the press has to report on is the headline and a timestamp.
Oddly enough it is the those details of the crime that have been trickling out that one would not expect – including the suspects possible location – but yet the generalities are being obscured, like what was stolen when did they steal it?
The answer to the latter of the two questions is of particular issue.
If Heartland personnel, and particularly Bob Carr, had absolutely no indication that something was awry with their processing system security until they were alerted by Visa and MasterCard at the end of October, then there is no problem.
Under this scenario, according to the chart above, Carr just happened to be in the middle of a major sell off of Heartland stock unlike any he has ever undertaken before when he found out “late in the fall” about the existence of problems.
It could simply be the case that Carr just happen to decide to sell 80,000 shares of Heartland stock for roughly .6 Million a pop on nine separate occasions about every other week in the four month period leading up to the announcement of the breach. These uncharacteristically large and more than frequent liquidations just happen to have occurred while the company was in the middle of an expensive acquisition and expansion of services push, all of course while the credit markets were in total dysfunction.
If on the other hand, company communiqué and records reveal that Heartland knew of possible anomalies in the processing security at the end of August instead of at the end of October, then we have a whole other scenario to apply the data to.
Under this hypothetical situation, Heartland may have discovered problems prior to end of August and may have known it was something serious simply because no one could figure it out. According to the official company statements, this was a difficult intrusion to detect, one that was missed more than once.
Again from Evan Schuman:
The initial internal conclusion was that “it looked most likely that it would be in a certain segment of our processing platform,” said Baldwin, adding that Heartland does not want to identify what that segment was. The company hired a forensic investigation team to come in and focus solely on that one area, an effort that ultimately proved fruitless. “We found issues in a large segment of our processing environment. The one that looked like the most promising turned out to be clean,” he said.
That second team “was nearing conclusion” and was about to make the same assessment the first team did: clean bill of health. But one of the last things that external, qualified risk assessor did was to try and match various temp files with their associated application. When some orphans-.tmp files that couldn’t be matched to any application or the OS-were turned over to Heartland’s internal IT group, they also couldn’t explain them, saying that it was “not in a format we use,” Baldwin said. More investigation ultimately concluded that those temp files were the byproduct of malware, and more searching eventually located the files in the unallocated portions of server disk drives.
So, continuing with the hypothetical scenario, Heartland would have had inside personnel looking for the problem when they get a call of Visa and MasterCard with the friendly heads-up. Heartland could have just not acknowledged the problem until their business partners forced them to.
The end of August is of interest because this is when Carr began to sell of large blocks of stock about every other week, and this was a significantly different trading pattern than Carr had engaged in previously.
If documentation turns up that indicates Heartland knew of serious problems with their network security prior to August 28th, these huge and rapid sell-offs by Carr may look more than suspect to the SEC.
I can not see the strategic value of withholding an accurate timeline of what exactly the company and Carr knew, and when exactly they knew it. But, if it turns out that everything is kosher here and all is as Heartland has indicated so far – which is very little – then I guess I just don’t understand Carr’s trading strategy over the last half of 2008 and how it related to his goals as a CEO for the growth an performance of his company.
They seem to be at odds, but that is no crime, just ask anyone who shorts their own company from time to time. It just needs to be cleared up. Not to worry though, as this is nothing that a solid and well documented timeline won’t be able to take care of (hint hint).
Meanwhile, Heartland’s stock (HPY) bounced back a little Wednesday, but is still trading at nearly half of it’s value prior to the breach announcement.
The data loss debacle at Heartland highlights the fact that the failure to secure information is a growing national security threat, and will be the next major shareholder derivative, director and officer liability, regulatory, consumer product safety, and class-action issue to impact our economy.
The Author gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and Information-Security-Resources.com
Retrieved from “http://www.articlesbase.com/investing-articles/did-heartland-payment-systems-ceo-make-insider-stock-trades-748366.html”
(ArticlesBase SC #748366)
Liked this article? Click here to publish it on your website or blog, it’s free and easy!
Anthony Michael Freed -
About the Author:
By Anthony M. Freed, Information-Security-Resources.com Financial Editor. Anthony is a researcher, analyst and freelance writer who worked as a consultant to senior members of product development, secondary, and capital markets from the largest financial institutions in the country during the height of the credit bubble. Anthony’s work is featured by leading Internet publishers including Reuters, The Chicago Sun-Times, Business Week’s Business Exchange, Seeking Alpha, and ML-Implode.
Questions and Answers
Ask our experts your Investing related questions here…200 Characters left
What are the ethical issues and concerns in stock trading other than insider trading?
Why is currency trading better than stock trading?I find thousands of stocks out to trade but you never know the perfomance in any one given time
Why the people always fall to the trap of Free Stock Tips given by their stock brokers and finish mostly with an loss in their investment?
Rate this Article
1
2
3
4
5
1
Feedback
Print
Re-Publish
Source: http://www.articlesbase.com/investing-articles/did-heartland-payment-systems-ceo-make-insider-stock-trades-748366.html
Article Tags:
bailout, banks, breach, data, finance, financial, identity, infosec, information, security, card, number, computer, credit, theft, online, personal, ssn, heartland payment, stocks, bonds, markets, litigation, class action
Related Videos
Related Articles
Latest Investing Articles
More from Anthony Michael Freed
How to Understand the Mortgage Meltdown part 4 of 4
Understand the mortgage meltdown by learning the about the three little securities, part 4 of 4 (05:53)
How to Understand the Mortgage Meltdown part 3 of 4
Understand the mortgage meltdown by learning the about the three little securities part 3 of 4 (07:41)
How to Understand the Mortgage Meltdown part 2 of 4
Understand the mortgage meltdown by learning the about the three little securities part 2 of 4 (07:23)
How to Understand the Mortgage Meltdown part 1 of 4
Understand the mortgage meltdown by learning the about the three little securities part 1 of 4 (03:22)
Heartland Payment Systems Breach is as Bad as the Tylenol Poisonings?
Heartland Payment Systems stock (HPY) was hit hard in the wake of what is being described as the biggest single breach of consumer and financial data security ever. The company issued statements Friday (1/23) in an effort at damage control in which the CEO compares the potential industry-wide impact of the breach to none other than that of the Tylenol poisonings of some twenty-five years ago that nearly brought down the drug maker.
By:
Anthony Michael Freedl
Finance>
Investingl
Jan 26, 2009
Facing the Information Security Hole in 2009
As we talk with people interested in this issue, including security gurus, corporate governance and regulatory experts, privacy advocates, directors and officers, corporate lawyers, managers, and plaintiffs and class-action attorneys, we get a lot of questions about this cutting-edge subject. The answers help explain why the failure to secure information is a lurking national and global security threat, and the next shareholder derivative, director and officer liability, regulatory, consumer…
By:
Laura Wilsonl
Law>
Cyber Lawl
Jan 26, 2009
lViews: 113
Alternative Investments
Traditional investments include cash, bonds and of course, stocks. Alternative investments are typically higher risk because of the trading styles, limited regulations and lack of liquidity.
By:
Frank Nagyl
Finance>
Investingl
Jan 14, 2011
We Could be in Great Depression II – But We’re Not! January 14, 2011
It’s obvious that global financial authorities were quite adept in preventing the collapse of the financial system, since we are not in Great Depression II. But why are they so inept at efforts to prevent the next crisis?
By:
Sy Hardingl
Finance>
Investingl
Jan 14, 2011
Share Dealing – Thoughts The Actual Beginner Should Preferably Ask Themselves
Every investor has their very own trading styles, long and short-term goals as well as the amount of chance they are able to put up with. Naturally, many of these goals will probably be set by the amount of capital the actual investor is willing to danger within share dealing. It is extremely advisable which before dropping all kinds capital into the marketplace that the buyer thinks about these paragraphs as well as jot down your ideas on each.
By:
Don Gragorianl
Finance>
Investingl
Jan 14, 2011
Is it too late to buy gold?
Since the beginning of the year the price of gold has been very volatile bouncing between £910 and £870 per ounce without any clear direction or reason for the volatility. This reflects the current market environment quite well as governments are trying to convince investors that they are on top of the situation but the data released by the independent market researchers tells something totally different.
By:
KK Bullionl
Finance>
Investingl
Jan 14, 2011
Forex Markets and the State of the World Economy
Whilst the US Dollar will often benefit from turmoil in the markets the US Federal Reserve’s second round of quantitative easing will most likely keep pressure on the Greenback.
By:
Thomas Bainbridgel
Finance>
Investingl
Jan 14, 2011
Option trading services for better trade decision
Stock trading has many facets to learn for all including stock investment professionals, traders or investors in general. One must be aware of the rules and regulations related to stock trading in order to bring more transparency in the way global stock markets run. Many online consultants are offering the excellent option trading services to their clients so that they would be able to learn the inner day trading of various transactions being carried out in the stock markets.
By:
thomasgalvinl
Finance>
Investingl
Jan 14, 2011
The Relevance of Option Trading Services in the Present Market Scenario
It is a known fact that people these days seek alternative methods of augmenting their financial positions. One of the easiest available alternative is to invest in the stock markets. But it is not at all easy for a novice to start investing their money just off the cuff in the stock market. Anybody who is planning to invest in the stock market must be guided properly by a professional who knows the world of stock markets inside out. Particularly when it comes to the trading of options.
By:
thomasgalvinl
Finance>
Investingl
Jan 14, 2011
NSE BSE Market Last Year And Investors’ Hope In The New Year
The year 2010 had been a wonderful year with market recovery accentuated by continuous heavy inflow of foreign funds since the mid of the preceding year. Despite the series of scams that did affect the NSE BSE market, the overall records on an average was satisfactory.
By:
Nirmal Kumarl
Finance>
Investingl
Jan 13, 2011
Did Heartland Payment Systems CEO Make Insider Stock Trades?
The date they settle on may well be the difference between market serendipity and an SEC investigation for insider trading, as an examination of stock sales made by Heartland CEO Robert O. Carr in the second half of 2008 raises some serious questions about just who knew what and when in the latest version of the worst-ever information security breach which has now spawned a class action lawsuit.
By:
Anthony Michael Freedl
Finance>
Investingl
Jan 31, 2009
lViews: 370
lComments: 1
Heartland Payment Systems Breach is as Bad as the Tylenol Poisonings?
Heartland Payment Systems stock (HPY) was hit hard in the wake of what is being described as the biggest single breach of consumer and financial data security ever. The company issued statements Friday (1/23) in an effort at damage control in which the CEO compares the potential industry-wide impact of the breach to none other than that of the Tylenol poisonings of some twenty-five years ago that nearly brought down the drug maker.
By:
Anthony Michael Freedl
Finance>
Investingl
Jan 26, 2009
Add new Comment
Your :
Comments on this article
0
1. Cindy Reynolds 29/07/2009
Would you please follow up with any new information regarding HPY.
Your Articles Here
It’s Free and easy
Sign Up Today
Author Navigation
My Home
View/Edit Q&A
Personal
My Home
View/Edit Q&A
Author Box
Anthony Michael Freed has 2 articles online
Contact Author
Subscribe to
Print article
Send to friend
Re-Publish article
Articles Categories
All Categories
Arts & Entertainment
Automotive
Beauty
Business
Careers
Computers
Education
Finance
Food and Beverage
Health
Hobbies
Home and Family
Home Improvement
Internet
Law
Marketing
News and Society
Relationships
Self Improvement
Shopping
Spirituality
Sports and Fitness
Technology
Travel
Writing
Finance
Accounting
Banking
Credit
Currency Trading
Day Trading
Debt Consolidation
Insurance
Investing
Loans
Mortgage
Personal Finance
Real Estate
Taxes
Wealth Building
Need Help?
Site Links
Webmasters
Business Info
Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2011 Free Articles by ArticlesBase.com, All rights reserved.