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Hackers Liable for Insider Trading?

By Mark H. Astarita, Esq.

I posed a question in an earlier post as to the liability of computer hackers for insider trading when they break into a company's computer systems, obtain material non-public information, and then trade on that information. There are a number of problems with that legal theory, as there is no fiduciary relationship between the hacker and the company. While the courts have eviscerated the legal underpinnings of 10(b)5 over the years, there is no support for the concept that a thief, a complete corporate outsider, has any liability under 10(b)5. His theft is a theft, it is not a fraud, and should not give rise to a securities fraud case, and certainly not an insider trading case.A commenter pointed out a recent Second Circuit decision, in SEC vs...continue to full post

Full post as published by SECLaw.com on November 19, 2009 (boomark / email).