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Hackers cannot be done for insider trading
HACKERS cannot be done for using information they find breaking into companies to play the stock market, a court has ruled.
Oleksandr Dorozhko made a fortune trading in stock options last autumn after he hacked his way into a company called IMS Health.
Dorozhko, a Ukrainian resident, made $296,456 in one day of trading, just before the company was about to announce disappointing earnings.
The Securities and Exchange Commission said he was insider trading. However now a federal judge has ordered the SEC to let him have the cash.
There is no doubt that Dorozhko got the information dubiously, but whether or not he broke security laws is another matter.
Judge Naomi Reice Buchwald of United States District Court said that alleged ‘stealing and trading’ or ‘hacking and trading’ does not amount to a violation” of securities laws.
Although Dorozhko could be done for stealing the information, the judge concluded he did not breach any "fiduciary or similar duty in connection with the purchase or sale of a security.”
She has allowed SEC to try to prove he got a tip from an insider, but there does not appear to be any evidence to book him with that.
More in the New York Times. µ
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Any assertions that Oleksandr Dorozhko hacked into computer servers of IMS Health are completely false and inaccurate. At no time were IMS computers breached by Dorozkko and IMS Health cooperated with the U.S. Securities and Exchange Commission in its investigation. The facts presented by the SEC before the court in this case were that "Dorozhko hacked into the computer network of Thomson Financial ("Thomson Financial") at 2:15:28 p.m. (EST) on October 17, 2007." The full decision is available at: http://www.imshealth.com/secvsdorozhko