BAE Retracts Hedge Fund Cyberattack Allegation

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BAE Retracts Hedge Fund Cyberattack Allegation

BAE Systems PLC (ADR) (OTCMKTS:BAESY) (LON:BA) clarified Wednesday that its executive Paul Henninger had “incorrectly presented” an alleged cyberhacking incident involving a hedge fund.

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In an interview in June, Paul Henninger said the cyberattack was having a material impact on the performance across the portfolio.

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Alleged attack on hedge fund

Last month, it was reported that cybercriminals managed to install a malicious computer program on the servers of a well-known hedge fund, interrupting high-speed trading and sending information about its trades to unknown parties late last year.

In his interview with CNBC, Paul Henninger, global product director at BAE Systems Applied Intelligence, said the hack was the most complex and sophisticated he’s seen in a new wave of attacks designed to extract business information from firms in many sectors.

Henninger added the hack certainly ended up costing the hedge fund millions of dollars. “This was not something that was a minor issue for them,” he said. “This was something that was getting reviewed at the board level of this hedge fund precisely because it was having a material impact on performance across the portfolio.”

BAE retracts allegation

However, on Wednesday, Natasha Davies, BAE Systems PLC (ADR) (OTCMKTS:BAESY) (LON:BA) spokesperson said that the attack Paul Henninger had described as a real event involving a hedge fund had in fact been a ‘scenario’ used by cyber experts inside BAE Systems.

While offering sincere apologies, Natasha Davies said “the attack was inaccurately presented as a client case study rather than as an illustrative example”.

Attributing reason for delayed clarification after nearly two weeks, she said that employees inside BAE had attempted to get more information on the incident and “it took some time” to conclude that it never happened.

She further clarified that Henninger, while still employed by BAE Systems PLC (ADR) (OTCMKTS:BAESY) (LON:BA), is taking some time away from the business.

On June 24, the Center for Financial Stability announced the creation of a partnership with the Federal Bureau of Investigation to better assess emerging risks and facilitate coordination surrounding cybersecurity and threats. Interestingly it cited at the time ‘news about cyber-attacks against a major unnamed hedge fund’.

It was reported last month that the hackers had a quick millisecond look at the HFT firm’s intentions before their trades were executed. HFT firms have been accused to seeing other investors’ trades before they hit the exchange.

Shawn Henry, a former executive assistant director at the FBI, was quoted as saying: “This is a broad attack against the financial services sector”.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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  1. This cyberhacking incident real or otherwise will be a reminder for financial services firms about their cyber security preparedness or the lack of it, McGladrey and vedder price are hosting a webcast on the 9th of July outlining the latest on cybersecurity in financial services and what you need to know to be ready for the Office of Compliance, Inspections and Examinations (OCIE’s) new cybersecurity initiative http://events.mcgladrey.com/CyberSecurityWebcast070914

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