Reservoir Hill writes "On Oct. 17, 2007, someone hacked into a computer system at IMS Health. A few minutes later Oleksandr Dorozhko, a Ukrainian resident, invested $41,671 in put options that would expire worthless three days later unless IMS shares plunged. The next morning IMS announced earnings and the share price did plunge, making $296,456 for Dorozhko by selling the puts. "Dorozhko's alleged 'stealing and trading' or 'hacking and trading' does not amount to a violation" of securities laws, Judge Naomi Reice Buchwald ruled last month. Although Dorozhko may have broken laws by stealing the information, "Dorozhko did not breach any fiduciary or similar duty 'in connection with' the purchase or sale of a security" and she ordered the SEC to let him have his profits. Through a strange anomaly in American securities laws a person who legally obtains insider information and trades on the basis of that information is breaking the law, while someone who illegally gets their hands on such information may not have violated the securities laws by trading on it. If her opinion stands, it will be very hard for the SEC to go after hackers in the future. The judge herself appreciated the absurdity of the situation, and expressed disappointment that the Justice Department had not brought criminal charges for computer hacking."
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