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Arrests Planned in Hacking of Financial Companies

Federal authorities were planning to arrest several people on Thursday on charges that they hacked into the computer servers of financial companies, including the parent company of the NASDAQ stock exchange, according to people briefed on the matter.

All the companies have not yet been identified publicly, but they extended beyond the trading system, these people said. The timing of the computer attacks have also not been made public, but at least some of them happened a number of years ago and are not continuing, according to the people.

The investigation was led by federal prosecutors in New Jersey. The Federal Bureau of Investigation in New York City was also involved.

The attacks underscore the broader threat that hacking poses to a financial system that is almost entirely reliant on networked communications.

The exchanges have been beefing up their defenses and preparations for an assault on their computer systems. Last Thursday, an industry group led an exercise, referred to as Quantum Dawn 2, in which the exchanges and other financial firms responded to a long mock simulated attack on the nation’s stock markets.

The arrests also come just a week after the World Federation of Exchanges and an international group of regulators released a report warning about the vulnerability of exchanges to cybercrime.

More than half of the world’s exchanges said that they had been attacked during the previous year. The report said hackers were shifting their focus away from simple theft and toward more “destabilizing aims.”

In a survey conducted for the report, 89 percent of the world’s exchanges said that hacking poses a “systemic risk” to global financial markets.

“A presumption of safety (despite the reach and size of the threat) could open securities markets to a cyber ‘black swan’ event,” the report said.

Over the last few years, accidental technological mishaps at the trading firm Knight Capital and the Nasdaq and BATS stock exchanges have revealed how even isolated programming errors can quickly ripple through the markets, causing significant losses in minutes.

The Justice Department and NASDAQ declined to comment.


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