Ticketmaster (parent company Live Nation Entertainment, (NYSE: LYV)) is set to pay a $10 Million fine after gaining illicit access into the network of its then competitor, Crowdsurge.
According to a release issued by the Department of Justice (DOJ), rather than "hacking" into Crowdsurge's computers to bypass security, Ticketmaster was able to gain access to the company's systems by using login credentials of a former employee that had been hired. Not only did Ticketmaster have access to privileged information on Crowdsurge itself, but it also had access to the privileged information made available to the company's clients. As part of its services, Crowdsurge offered an "artist toolbox" app that provided data about tickets sold through Crowdsurge, allowing artists to view their ticket sales in realtime.
Ticketmaster intended to use this vulnerability to "cut [them] off at the knees," essentially leveraging the insider knowledge gained from Crowdsurge's computers against them. Perhaps more concerningly was how the practice was treated within Ticketmaster, which was also noted by the DOJ in its release.
"Ticketmaster's employees brazenly held a division-wide 'summit' at which the stolen passwords were used to access the victim company's computers, as if that were an appropriate business tactic," the filing says.
According to the release issued by the DOJ, Ticketmaster agreed to pay the fine as part of a deferred prosecution agreement. Ticketmaster had been charged with five counts of "criminal information," all of which have been settled as part of the agreement. As part of the agreement, Ticketmaster is also required to stick to a "compliance and ethics" program to prevent further law violations. Ticketmaster is also required to regularly report the program's implementation to the United States Attorney's Office.
The agreement with the DOJ doesn't seem to have had much of an effect, if any, on Live Nation's stock. The Department of Justice's Wednesday announcement came after an early-Monday rally drove Live Nation's stock up 3.7% on Monday. Tuesday was mostly uneventful, but on Wednesday, we see a very slight downward trend that continues until markets close for the week on Thursday. Shares ended up 1% down since Wednesday as markets closed for New Years' but were still 2% up for the week.