Tuesday, June 14, 2011

Hedge Fund Attacks IMF?

Someone broke into the computer network at the International Monetary Fund (IMF) and some security experts are saying the culprit must be a national government. The BBC News story “Government ‘may have hacked IMF’” quotes “Graham Titherington, a security analyst with research firm Ovum”:

“Any attack that shows money, time and resources went on it points to a state attack. States and their intelligence agencies have far more resources than criminal gangs.”

Ordinarily I would agree with this assessment, but this year, with a financial target and no indication that the method of attack required a large geographical footprint, the means and motivation lie with the better-funded speculators who hope to orchestrate or just trade around the financial collapse of nations. To simplify somewhat, the IMF computer break-in was likely the work of a hedge fund.

Bond and currency speculators who are well-funded and can anticipate the dramatic moves and announcements that are expected to follow this year and next could stand to make a trillion dollars or more in a few days — or, if caught flat-footed when nations go down, could lose a trillion. In strictly financial terms, no national government has quite so much at stake.

Similar questions have to be considered at Citibank, where a similar break-in took place. While Citi’s public statements have only addressed the customer data that was compromised, ostensibly by a crime group, the more worrisome issue has to be whether one of Citi’s crosstown rivals was able to access some of the more sensitive information Citi might hold about the financial status of its largest customers, including governments.

The scale of spying is always greater than the discussion of it. For every attack we hear about, there may be 200 that are hushed up or go undetected. And so, even if IMF and Citi were able to thwart the attacks on their networks, the sponsors of those attacks may get the information they are seeking from other, less vigilant sources.