Nasdaq stock exchange gets hacked, Facebook gets scraped

Computer trickery has been afoot this weekend, after the company that owns the Nasdaq stock exchange reported that it had found suspicious files on its computer servers that may have been placed there by hackers.

The announcement also comes as a legal battle has erupted between social networking giant Facebook and dating site Lovely-Faces.com, which has admitted it “scraped” profile pictures from Facebook to use for its own page.

Last week the Wall Street Journal reported that hackers had broken through Nasdaq OMX’s systems during the past year. Following that report, Nasdaq OMX confirmed in a statement that it had found suspicious files in a web-based program known as Director’s Desk.

“Through our normal security monitoring systems we detected suspicious files on the US servers unrelated to our trading systems and determined that our web facing application Directors Desk was potentially affected,” the company said.

“We immediately conducted an investigation, which included outside forensic firms and US federal law enforcement.”

However, while the matter is currently under investigation, and while the company says that there is no evidence any customer information was accessed, the matter has still highlighted the security weaknesses around electronic trading.

These computer networks are constantly online and are used by traders to facilitate 24-hour exchanges. Any type of hacking attempt could cause serious damage, experts have warned – especially if investors start viewing these types of services as more risky and prone to attacks.

Patrick Healy, chief executive of consultancy firm Issuer Advisory Group, told the WSJ that some companies may think twice about using the Director’s Desk program or any other type of exchange service.

“This is not something that issuers are just going to ignore,” Healy said. “If you’re a user of that product, and there are many, you’re going to ask, ‘Can I trust that system for confidentiality?'”

However, both the NYSE Euronext and Direct Edge, two of the largest exchange operators, have said they will continue working with Nasdaq. And Nasdaq OMX said the actual trading architecture was not touched at all – but experts say Nasdaq will need to keep investors confident if they want to increase or at least maintain the current level of confidence in electronic trading measures.

“There have been a number of events over the last few years that have damaged investor confidence and this could certainly be another one,” Tim Ghriskey, chief investment officer of Solaris Asset Management, told Reuters.

Meanwhile, a legal battle may have begun between Facebook and dating sight Lovely-Faces.com., which admitted over the weekend it had taken images from Facebook profiles for profiles on its own site.

Lovely-Faces founder Paolo Cirio and Alessandro Ludovic said in a statement that it had it had taken pictures of about 250,000 people using facial recognition software.

“Immersing ourselves in the resulting database was a hallucinatory experience as we dove into hundreds of thousands of profile pictures and found ourselves intoxicated by the endless smiles, gazes and often leering expressions,” the artists said.

“So we established a new website (lovely-faces.com) giving them justice and granting them the possibility of soon being face to face with anybody who is attracted by their facial expression and related data.”

The pair have grouped the photos into categories based on those facial expressions, with search terms including “sly” or “easy-going”. Once a user has found a person they like, they are able to connect to their Facebook profile.

The pair say they created the website so people could connect without being limited by Facebook’s rules.

However, Facebook isn’t so amused. Director of policy communications Barry Schnitt told Wired the incident goes against its terms of use.

“Scraping people’s information violates our terms. We have taken, and will continue to take, aggressive legal action against organisations that violate these terms,” Schnitt said.

But while Facebook may be preparing legal action against the site, it ought to be pointed out that founder Mark Zuckerberg gained notoriety while at Harvard University for creating a website called “Face Mash” that scraped photographs from the university’s own networks.