Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

SEC Reaches Settlements in EDGAR Hacking Case

Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission announced settlements against two traders who allegedly profited from trading on nonpublic corporate earnings information hacked from the agency’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system for public company filings.

The settlements against David Kwon and Igor Sabodakha for using nonpublic documents containing earnings announcements of publicly traded companies for illegal trading are subject to court approval.

According to the SEC’s complaint, Kwon, of California, Sabodakha, of Ukraine, and seven other defendants participated in the scheme.

The SEC announced charges against the nine individuals on Jan. 19.

The complaint alleged that a Ukrainian hacker extracted EDGAR files containing nonpublic earnings results.

Kwon and Sabodakha allegedly traded on the basis of this hacked information before the earnings were released to the public.

Sabodakha also allegedly previously traded based on material nonpublic information obtained through the hack of at least two newswire services.

Kwon and Sabodakha consented to the entry of final judgments that would permanently enjoin them from violating the antifraud provisions of the securities laws.

The SEC said the settlement terms are as follows:

Kwon agreed to pay $165,474 in disgorgement, representing the profits from his illegal trades, and $16,254 in prejudgment interest. The settlement reserves the issue of a civil penalty for Kwon for further determination by the court upon a motion of the SEC.

Sabodakha agreed to disgorge $148,804 in profits from his illegal trades, including trades he conducted in the account of his wife, Victoria Vorochek, with prejudgment interest of $20,945. Sabodakha also agreed to pay a civil penalty of $148,804. The SEC will move to dismiss the charges it had filed against Vorochek.

The SEC’s continuing litigation is led by Christopher Bruckmann and Olivia Choe and supervised by Stephan Schlegelmilch.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.