Foreign National and American Trader Settle Fraud Charges in EDGAR Hacking Case

(HedgeCo.Net) The Securities and Exchange Commission today announced settlements with David Kwon and Igor Sabodakha, two traders who allegedly profited from trading on nonpublic corporate earnings information hacked from the SEC’s EDGAR system. The settlement agreements are subject to court approval.

According to the SEC’s complaint, Kwon, of California, Sabodakha, of Ukraine, and seven other defendants participated in a scheme to hack into EDGAR and extract material, nonpublic information to use for illegal trading. 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 in the narrow window of time between when the files were extracted from EDGAR and when the information was released to the public. Sabodakha also allegedly previously traded based on material nonpublic information obtained through the hack of at least two newswire services.

“As alleged in our complaint, the defendants engaged in an international scheme to obtain and use hacked information to enrich themselves,” said Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit. “Today’s result reflects the SEC’s ability to investigate complex schemes conducted both here and abroad and to hold their perpetrators accountable.”

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

This entry was posted in HedgeCo Networks Press Releases, HedgeCo News, HedgeCoVest News. Bookmark the permalink.

Leave a Reply