The trial against a former UBS employee charged with hacking the company's networks shows up embarrassing failures in UBS's security and disaster preparedness measures.

The defendant is Roger Duronio, 63, who, at the time of the crime, was a UBS PaineWebber systems administrator. Duronio is facing charges of computer sabotage and securities fraud in a federal trial in U.S. District Court in Newark that's ongoing this week. Prosecutors say Duronio, who was angry because he thought he wasn't making enough money, planted a type of malicious software called a "logic bomb," while logged in from home over the company VPN, that went off March 4, 2002.

Here's where it gets embarrassing for UBS PaineWebber: As testimony by its own employees shows, UBS PaineWebber failed to take some elementary security precautions which could have minimized the damage. And that failure might--if defense attorney Chris Adams gets his way--make it impossible for U.S. prosecutors to get a conviction against Duronio.

Adams says the prosecutors have the wrong guy. He's attempting to show in cross-examination of the prosecution witnesses that lax security at UBS PaineWebber would have allowed anyone to have logged in to the network, planted the logic bomb, and left a false digital trail to make Duronio look like the guilty party.

Some 40 systems administrators at the company shared the same 'root' password to gain administrator access to the network, where they had free rein to install software or make any changes they wished on the network. It was not remarkable for systems administrators to get up from their desks and wander off while still logged in as 'root,' allowing anyone to sit down and have root access to the network, according to testimony from UBS IT manager Elvira Maria Rodriguez.

The damage to UBS PaineWebber was catastrophic. According to the report from Sharon Gaudin: "Nothing more than 50 to 70 lines of malicious code ... took down about 2,000 servers, leaving 8,000 brokers across the country unable to work. IT teams spent sleepless nights on conference calls with IBM and scrambled to reset servers, trying to undo damage that still, four years later, hasn't been completely repaired." At least 400 employees had to drop what they were doing and troubleshoot the problem. "Assessing and repairing the damage cost $3.1 million. In some cases, brokers were down for days, even weeks, depending on how badly their machines were hit, how remote the offices were, and if the branch's backup tapes could be found." UBS PaineWebber failed to make backups on 20% of its servers, according to testimony from UBS IT manager Elvira Maria Rodriguez.

The UBS PaineWebber case demonstrates that every business needs to take security and disaster preparedness measures. We're all under attack every day by outside hackers, and, unfortunately, every business has disgruntled employees. And natural disasters and terrorists strike everywhere.

UBS PaineWebber is a stark example of what happens to companies that led their guard down.

Reporter Sharon Gaudin returns to Newark today for ongoing on-the-scenes coverage as the trial goes through its second week.

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