Ukrainian hacker makes a mint with share fraud

The New York Times carried an interesting story on Friday about a Ukrainian `consultant' who hacked a computer system to steal inside information on companies.

Using that info, the hacker is alleged to have bought and sold shares and made more than a few crusts in the process.

The case involves a Ukrainian engineering consultant named Oleksandr Dorozhko who is alleged to have hacked into a computer belonging to IMS Health, a company that provides market research to the pharmaceutical and health care industries.

Dorozhko is alleged to have gained access to info on a negative earnings announcement that IMS was to make a few hours later on October 17, 2007.

By betting on the share price taking a tumble, Dorozhko is said to have made a profit of around $285,000 - around six times his annual income, says one newswire.

According to one newswire, his broker suspected something was wrong with the trades and froze the account.

Now the SEC (Securities and Exchange Commission) wants to seize the dosh but a federal judge in the US has ruled that the freezing of the money was unlawful because Dorozhko didn't violate the securities law
governing insider trading.

The SEC has appealed the case, arguing that there was deception involved in the trade since Dorozhko deceived IMS's computer system in gaining unauthorised access to it.

The $64,000 question, however, is what wasn't the Ukrainian consultant charged with computer crime legislation, rather than violating SEC trading rules?

An interesting question that the media is bound to ask once the story hits the US headlines in the next few days...