2020-06-10 sec-litreleases litigation_release 66 KB 3,108 chars

SEC v. Arkadiy Dubovoy; Igor Dubovoy; Southeastern Holding and Investment Company LLC; APD Developers, Inc.; Leonid Momotok; Aleksandr Garkusha, et al., No. LR-24833, Eastern District of New York (June 10, 2020) — Press Release

raw: Dubovoy, et al.

Dubovoy, et al., No. 2:15-cv-06076 (D.N.J. June 10, 2020)

Caption: Price Acoustics, Inc. v. The Ohio Casualty Insurance Company

summary

Eight defendants, including Arkadiy Dubovoy and Igor Dubovoy, settled with the SEC over an international scheme to trade on hacked news releases, resulting in over $14 million in monetary liabilities.

paragraph

The SEC obtained settlements with eight defendants, including Arkadiy Dubovoy, Igor Dubovoy, and others, in an international scheme to trade on hacked news releases. The defendants were ordered to pay over $14 million in disgorgement, prejudgment interest, and civil penalties. The scheme involved Ukrainian hackers stealing corporate earnings releases and transmitting them to traders, who used the nonpublic information to place illicit trades.

narrative

The Securities and Exchange Commission (SEC) secured settlements with eight defendants in an international scheme involving hackers who stole nonpublic corporate earnings releases from newswire services and transmitted them to traders, who then executed illicit trades in stocks and options. Defendants Arkadiy Dubovoy, Igor Dubovoy, Leonid Momotok, Aleksandr Garkusha, and Vladislav Khalupsky were previously convicted or pleaded guilty in parallel criminal cases, with their disgorgement obligations satisfied by criminal restitution and forfeiture orders. Memelland Investments Ltd., which faced no criminal charges, agreed to pay disgorgement and a civil penalty, contributing to over $14 million in total monetary liabilities imposed across the settlements. The SEC obtained permanent injunctions against all settling defendants for violating Sections 17(a) and 10(b) of the federal securities laws and Rule 10b-5. The agency had already recovered over $50 million from 13 prior settlements in this case. The settlements bring the total amount recovered by the SEC in this case to over $64 million. The SEC's litigation continues against the remaining defendants charged in its case.

Enriched metadata

Scheme: cyber-fraud (95%)
Court: Eastern District of New York
Case No.: 2:15-cv-06076
Outcome: pleaded
Civil penalty: $14,000,000
Entity: Dubovoy, et al.

Classified cyber-fraud(confidence 95%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →

Extracted insights

Dollar amounts 2

$50.00M $50 million $10M–$100M
$14.00M $14 million $10M–$100M

Entities 4

person amended complaint
person Arkadiy Dubovoy
person civil action
agency Securities and Exchange Commission

Triples 28

SEC obtained court approval settlements with eight defendants
SEC filed a civil action charging the eight settling defendants
SEC announced it has obtained court approval of settlements with eight defendants
Securities and Exchange Commission obtained court approval of settlements with eight defendants
Securities and Exchange Commission filed a civil action in New Jersey federal court
eight defendants charged in connection with an international scheme to trade on hacked news releases
Arkadiy Dubovoy is one of the eight settling defendants
Securities and Exchange Commission obtained court approval of settlements eight defendants charged in connection with an international scheme to trade on hacked news releases
Securities and Exchange Commission filed a civil action against eight settling defendants in New Jersey federal court
Securities and Exchange Commission filed an amended complaint in New Jersey federal court
Securities and Exchange Commission announced court approval of settlements
Securities and Exchange Commission reached settlements with traders
Commission filed civil action
Commission filed amended complaint
Commission charged eight settling defendants
Arkadiy Dubo is defendant
SEC announced it has obtained court approval of settlements with eight defendants
SEC obtained court approval of settlements with eight defendants
Commission filed a civil action in August 2015
eight defendants charged in connection with an international scheme to trade on hacked news releases
Securities and Exchange Commission announced settlements with eight defendants
Securities and Exchange Commission filed civil action
Securities and Exchange Commission obtained court approval
Arkadiy Dubovoy charged in connection with hacking scheme
Dubovoy settled with SEC
SEC charged eight defendants
Civil Action filed in New Jersey federal court
Litigation Release issued No. 24833

View original SEC litigation releasesec.gov

Extracted body text (3,108c)

SEC Reaches Settlements with Traders in Newswire Hacking and Trading Scheme Litigation Release No. 24833 / June 10, 2020 Securities and Exchange Commission v. Dubovoy, et al., Civil Action No 2:15-cv-06076 (D.N.J. filed August 10, 2015) The Securities and Exchange Commission announced today that it has obtained court approval of settlements with eight defendants charged in connection with an international scheme to trade on hacked news releases. In August 2015, the Commission filed a civil action and then an amended complaint in New Jersey federal court charging the eight settling defendants, Arkadiy Dubovoy, Igor Dubovoy, Southeastern Holding and Investment Company LLC, APD Developers, Inc., Leonid Momotok, Aleksandr Garkusha, Vladislav Khalupsky, and Memelland Investments Ltd., together with more than 20 others, with securities fraud. According to the amended complaint, Ukrainian hackers used advanced techniques to hack into newswire services and steal hundreds of corporate earnings releases before the newswires released them publicly. The complaint alleged that the hackers created a secret web-based location to transmit the stolen data to traders in the United States and abroad. The traders allegedly used this nonpublic information in a short window of opportunity to place illicit trades in stocks, options, and other securities, sometimes funneling a portion of their illegal profits to the hackers. Previously, in parallel criminal actions in the District of New Jersey and the Eastern District of New York, defendants Momotok, Garkusha, and Khalupsky were convicted, sentenced, and ordered to pay restitution and to forfeit assets. Defendants Arkadiy Dubovoy and Igor Dubovoy have pleaded guilty and are awaiting sentencing. The court entered final judgments enjoining the settling defendants from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgments order Arkadiy Dubovoy, Igor Dubovoy, Southeastern Holding, APD Developers, Momotok, Garkusha, and Khalupsky to pay disgorgement and prejudgment interest, which is deemed satisfied by the restitution and forfeiture orders against the individual defendants in the parallel criminal actions. Memelland, which was not charged criminally, has agreed to pay disgorgement and a civil penalty. Collectively, the monetary liabilities imposed exceed $14 million. The Commission also dismissed its claims against defendant Global Hedge Capital Fund Ltd., which has ceased operations. Prior to these settlements, the SEC had recovered over $50 million and obtained full injunctive relief from 13 other defendants who previously agreed to settlements in this case. The Commission's litigation continues against the remaining defendants charged in its case. For more information, see Press Release 2015-163 (Aug. 11, 2015) and Litigation Releases 23345 (Sep. 14, 2015), 23458 (Feb. 2, 2016), 23471 (Feb. 18, 2016), 23498 (Mar. 24, 2016), 23530 (May 4, 2016), 23682 (Nov. 2, 2016), and 24193 (July 10, 2018).

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