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SEC Settles With Traders Accused of Hacking Its Edgar Database

SEC Settles With Traders Accused of Hacking Its Edgar Database

(Bloomberg) -- The U.S. Securities and Exchange Commission agreed to settle fraud claims against two men accused of profiting from an embarrassing episode for the regulator: the hacking of its Edgar database of corporate filings.

David Kwon, Igor Sabodakha and seven other defendants participated in a 2016 scheme that involved extracting files containing companies’ financial results from Edgar and making trades before the information was released publicly, the agency said in a Thursday statement.

Kwon, a Californian, and Sabodakha, a Ukrainian, were part of an international group that reaped more than $4.1 million from illicit trading, the SEC said in a lawsuit filed in federal court in New Jersey in January 2019. The group also infiltrated corporate press announcements before they were made public, a scheme the SEC also shut down in 2015.

“The defendants engaged in an international scheme to obtain and use hacked information to enrich themselves,” Joseph Sansone, head of the SEC’s market abuse unit, said in the agency’s Thursday statement.

Kwon agreed to pay $165,474 in disgorgement and $16,254 in prejudgment interest and may face an additional penalty determined by a court. Sabodakha agreed to pay a penalty of $148,804 and the same amount in disgorgement plus interest.

Edward Kim, an attorney for Kwon, declined to comment. Sabodakha’s attorney didn’t immediately respond to a request for comment.

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