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

Ah so Mr Alan Ralsky one of the biggest spammers of all-time is back in the news after his indictment with 10 others for running a large scale spam operation intended to inflate stocks artificially.

At one time it was thought Mr Ralsky and his friends were responsible for the majority of the spam sent, he’s certainly one of the most prolific and there are around 150 spammers in the World responsible for about 90% of the spam received.

Infamous spam king Alan M. Ralsky is on the run following the Jan. 3 indictment of Ralsky and 10 others for operating a sophisticated spam scam involving pump-and-dump Chinese stocks.

The 41-count indictment, unsealed in a Detroit federal court, claims Ralsky, 52, and his fellow defendants operated a wide-ranging international fraud scheme involving millions of illegal e-mails touting thinly-traded Chinese penny stocks. Ralsky profited by selling the stock at artificially inflated prices.

Only two of the defendants appeared in court Jan. 3 for arraignment. Ralsky is reportedly at large in Europe.

It looks like he wants to skip on this one. It is a pretty serious case though – international stock fraud.

According to the indictment, Ralsky and his group earned approximately $3 million on the scheme during the summer of 2005. Ralsky faces charges including conspiracy, fraud in connection with electronic mail, computer fraud, mail fraud, wire fraud and money laundering.

The illegal e-mail practices cited in the indictment include evading spam-blocking devices, falsifying headers and domain names, using proxy computers to distribute the spam and misrepresenting the advertising content in the actual e-mail.

Ralsky seems to have made a good living from spamming when back in his palatial, 8,000-square-foot mansion in suburban Detroit was raided. He was living well.

He has admitted that spam had made him a millionaire.

Source: eWeek