Securities Law | Expert Legal Commentary
September 17, 2009
SEC v. Dorozhko: No Fiduciary Duty Required to Assert Insider Trading Violations Against Hacker
SEC v. Dorozhko
By
Josh Lawler and Joel B. Ginsberg of Zuber & Taillieu LLP
In a controversial decision that has had the blogosphere buzzing, the Second Circuit determined that a computer hacker who steals and uses material nonpublic information for his own profit might be liable for insider trading violations even if he has no fiduciary relationship with the company or its shareholders. In SEC v. Dorozhko, 574 F.3d 42 (2nd Cir. 2009), the Court agreed with the SEC and several securities commentators who argue that a breach of fiduciary duty should not be required when the defendant relies on affirmative misrepresentation to commit fraud in connection with the purchase or sale of securities. The Court found that the act of hacking might alone satisfy the deception requirement of 10b-5.
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About the Authors
Josh Lawler is a Partner of Zuber & Taillieu LLP, focusing on corporate law and securities and finance law.
Joel B. Ginsberg is an Associate of Zuber & Taillieu LLP, focusing on corporate law, and securities and finance law.
Image Credit: ©iStockphoto.com/ DivaNir4a
View a PDF of the judicial opinion