Computer Sabotage Plot Tied To A Bid For Financial Gain - InformationWeek

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Computer Sabotage Plot Tied To A Bid For Financial Gain

This past week, the government laid out its case for how the defendant allegedly planned to profit from taking down UBS PaineWebber's network. Prosecutors say his "risky" investments would have only paid off if the stock dropped. The defense argues he simply had an aggressive investment strategy.

While the trial primarily concerns a logic bomb and computer sabotage, it's also largely centered around the money. A major portion of the testimony this past week focused on the financial side of defendant Roger Duronio's alleged plot.

Two financial advisors took the stand this week, testifying about Duronio buying a lengthy series of put options on UBS that, simply put, were high-stake bets that the company's stock would drop in a matter of weeks. With put options, the investor only gets a payout if the stock goes down.

The government contends these investments were the last piece of Duronio's plot to rake in a major windfall while he sought to get even with his former employer for not paying him the maximum of his potential $50,000 bonus that year.

Duronio, according to Assistant U.S. Attorney V. Grady O'Malley in his opening statements, quit his job on Feb. 22, 2002, the day the bonuses were handed out and Duronio's came in at about $15,000 less than he'd hoped for. Prior to being walked out of the office that day, O'Malley alleges Duronio already had his plan, and the logic bomb, in place.

With the malicious code allegedly already planted on UBS computers across the country, Duronio left UBS for the last time on Feb. 22 and headed straight to his broker's office to buy put options.

Gerard Speziale, who worked as a financial advisor for UBS at the time of the attack, told the jury that on the day Duronio quit his job, he used part of his bonus to buy seven put options against Merrill Lynch, three against CitiGroup, and 30 against UBS.

Speziale testified that he told Duronio these investments were ''highly risky'' and warned him off of making them. The expiration for the puts was March 15. The short window of time makes the puts that much more risky, offering up cheaper buys and much greater payouts if the stock actually falls to a preset price.

Speziale pointed out that while UBS had released a report announcing slumping earnings, that news had already come out on Feb. 14 and the market had already reacted to it. He told the jury he thought it was risky to bet that UBS stock would drop six points in a matter of weeks when it had been a stable stock for some time.

The financial advisor also pointed out that 100% of Duronio's account was speculative. And this was all coming from a man who had never invested in puts before that very month. Duronio bought his first put on Feb. 5, which was 17 days before he quit his job and 27 days before the logic bomb went off.

''I just thought it was interesting that he's betting against his own company,'' Speziale told the jury.

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