Even if the SEC isn’t interested in doing much—and it certainly isn’t, from levying fines to collecting those it has reluctantly imposed to rewarding those who force it to do so in the first place—you might think it would at least come down hard on those who had wronged it institutionally. For while a friendly, lasseiz-faire attitude towards financial wrongdoing is very much in line with SEC Chairman Jay Clayton’s patron, so is blind, fulminating rage and revenge-taking on those who have humiliated you. And David Kwon and Igor Sabodakha certainly did that to Clayton & co., allegedly getting reams of inside dirt from a hack of the SEC’s own EDGAR filing system, which hack took the SEC a year to learn of—thanks to the insider-trading on that information that Kwon, Sabodakha and others were allegedly doing.
But no: Perhaps in recognition of their service inadvertently pointing out the weakness in the SEC’s systems, and as a reward similar to those the SEC no longer wants to hand out to whistleblowers, Clayton and his confreres meted out one of the most hilariously lenient settlements imaginable. Not only were Kwon and Sabodakha not banned (they merely promise not to do it again), they don’t even have to pay back all of the allegedly ill-gotten gains they made.
The amount Mr. Kwon is required to repay is less than half of the profit he was accused of earning from the trading scheme. The SEC’s civil complaint from last year said Mr. Kwon earned $401,474 from his trades.
The SEC said in a news release that it reserved the right to seek a civil fine against Mr. Kwon, who agreed to settle without admitting or denying the allegations.
That’ll definitely teach people not to try to hack the SEC, which definitely has the money to make sure its systems are locked down tight.
Trader Accused of Profiting From Hack Agree to Settle With SEC [WSJ]
Foreign National and American Trader Settle Fraud Charges in EDGAR Hacking Case [SEC]
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