A former financial analyst used Xbox audio chat to conduct insider trading, the U.S. Securities and Exchange Commission (SEC) alleged Thursday.
The SEC has charged four men with insider trading of securities based on insider knowledge of various business mergers and acquisitions, the government agency announced. The U.S. District Court for the Southern District of New York has also placed criminal securities fraud charges against three of the men, according to an SEC release.
“As alleged in our complaint, Anthony Viggiano violated his employers’ trust by misusing his access to confidential information to repeatedly and unjustly enrich himself and his friends,” said SEC Market Abuse Unit Chief Joseph Sansone, in a statement.
According to the SEC complaint, Viggiano possessed insider information in his prior role as an analyst at two different financial firms. He then allegedly shared said knowledge with friends Stephen Forlano and Christopher Salamone, as well as with another individual, Nathan Bleckley.
Viggiano allegedly gave Forlano some of his own funds to trade with in a purported effort to reduce suspicions that Viggiano might be profiting from insider trading. The other individuals named in the complaint allegedly engaged in insider trading based on Viggiano’s tips, each earning thousands of dollars in trading profits as a result.
But perhaps one of the most surprising allegations in the case is that Forlano told Bleckley to use Xbox audio chat, and conveyed insider trading knowledge via the platform.
Over an Xbox audio call the SEC believes took place on or before August 31, 2022, Forlano allegedly relayed information from Viggiano to Bleckley that American ecommerce company ChannelAdvisor (ECOM) would be acquired soon, and shared an anticipated share price for the company.
After Forlano tipped Bleckley off about the impending ECOM acquisition over Xbox chat, Bleckley purchased ECOM stock, according to the complaint. Once the acquisition news was made public, ECOM stock price rose over 55%, from $14.70 to $22.79 on the New York Stock Exchange. Bleckley then sold all 1,057 shares and 50 ECOM call option contracts, earning $23,003 in profits.
The complaint also details other such alleged incidents of insider trading, with Salamone gaining about $322,000, Forlano gaining about $114,000, and Bleckley as well as other individuals gaining roughly $110,000 in total illicit profits.
While it’s unclear exactly how the SEC obtained knowledge of the Xbox audio calls as part of its ongoing investigation, it’s worth noting that Xbox isn’t exactly the most privacy-friendly communication method out there. Xbox consoles can record, share, and report in-game audio to Microsoft when incidents of inappropriate behavior occur.
But Xbox employees aren’t listening to audio calls and don’t store conversations, Xbox GM of Trust and Safety Kim Kunes previously told The Verge in July.
“Recording is strictly done through the reporting functionality, and it’s only available for moderation purposes,” Kunes said, adding that recorded clips can’t be separately saved or shared, and are deleted 24 hours after first capture.
A Microsoft spokesperson confirmed to Decrypt via email that Xbox consoles are "not actively listening or recording" user conversations.
"There is no functionality for Xbox to record player audio and share with authorities. The only scenario in which Xbox would receive access to a voice clip is through its voice reporting feature, which was introduced in July to support a safer community for players," the Microsoft representative said.
Editor's note: This story was updated after publication to add comment from Microsoft.