Naomi Reice Buchwald - SEC V. Dorozhko

SEC V. Dorozhko

In a 2008 civil case for insider trading, Judge Buchwald ordered the U.S. Securities and Exchange Commission (SEC) to unfreeze the ill-gotten profits of Ukrainian resident Oleksandr Dorozhko. Dorozhko was accused of hacking into a company database to access a then-unreleased earnings announcement. Based upon the undisclosed information, Dorozhko invested $41,671 in put options, which he sold the following day for $328,571. The SEC froze the profits, but the Judge ruled against the SEC, finding that while Dorozhko's conduct almost certainly was criminal, it did not fall within the relevant civil statute. Judge Buchwald stayed her order pending appeal.

In a highly deferential opinion, the Second Circuit Court of Appeals reversed the Judge's ruling. When Dorozhko later stopped participating in his defense, Judge Buchwald granted the SEC summary judgement and ordered Dorozhko to pay nearly $580,000 in disgorgement, prejudgment interest, and a civil penalty. It was later reported that the S.E.C. managed to seize about half of this amount.