Ah I think it’s time for controversy on a Tuesday, what do you think about this case where a hacker got some info on a company about it’s soon to be plummeting share prices by breaking into their computer. By investing $41,000 in stock potion trading on the shares that were about to drop – he pocketed almost $300,000!
Even so the story has changed slightly, they said it wasn’t him that broke into the network – but it was someone else. Either way a hacker got the info and he exploited it.
Oleksandr Dorozhko made almost $300,000 in stock-option trading by using insider information that was obtained after someone hacked into a financial network and stole confidential information concerning a company called IMS Health. Now, the Ukrainian resident is exploiting a loophole that may allow him to keep the ill-gotten gains for good.
That’s because US securities laws, unlike those in Europe and elsewhere, define insiders as those with a fiduciary role with a company – say, a corporate executive, investment banker or attorney. As a mere hacker, or as an associate to a mere hacker, Dorozhko had no such function, so the laws cannot be used to seize the assets, a federal judge has ruled.
Because he has no part in the company it cannot be considered inside trading. This means it was a legitimate transaction and he’ll get to keep the money! They can’t seize it back and it’s unlikely they’ll nail him for hacking as he lives outside of the US, also being a Ukrainian it’s unlikely even if they did go after him that they would recover any of the money.
The strange tale, which was reported here by The New York Times, reads like a chapter out of Catch 22. According to evidence presented by the Securities and Exchange Commission, minutes after someone broke into a network of Thomson Financial and stole a gloomy IMS Health earnings report scheduled to go public a few hours later, Dorozhko invested a little more than $41,000 in put options that bet the company’s share price would plunge.
And plunge it did. Dorozhko ended up pocketing more than $296,000 in the transaction. Not bad for a few hours work.
Just about everyone agrees he committed fraud and just about everyone agrees it was for the purpose of gaining an unfair advantage in trading shares of IMS Health. And yet, because the information was illegally obtained, US insider laws have no bearing, according to US District Judge Naomi Reice Buchwald, who ordered the SEC to turn over the money. Ironically, had the insider information been obtained legally, the SEC would most likely have been permitted to seize the funds.
So what do you think about this? For once the US legal system is protecting the guilty man instead of incarcerating the innocent man.
It’s a pretty interesting story though and Eastern European hackers have been guessing file names for a while and using unreleased documents to predict share prices (predictable resource location hacks).
Source: The Register
- Google’s Chrome Apps – Are They Worth The Risk?
- Twitter Breach Leaks 250,000 User E-mails & Passwords
- More Cyberterrorism – Taiwan Political Party Accuses China of Hacking
- New Sophisticated Botnets Discovered
- UK hackers condemn McKinnon trial
- Dshocker AKA Aush0k Hacker Pleads Guilty to Computer Felonies
Most Read in General News:
- Hacking Still Can’t Outdo Stupidity for Data Leaks - 125,098 views
- eEye Launches 0-Day Exploit Tracker - 85,082 views
- One Of The World’s Most Prolific Music Piracy Groups Busted - 43,465 views