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Laws on cyber-insider trading not always clear

It is not all that uncommon for people in New York to hear reports about a person, often a corporate executive of a company, being accused of some form of embezzlement, insider trading or other white collar crime. This is not because the people are likely criminals or in search of some easy way of making money. It may be due in part to the fact that the roles these people hold provide them insight into certain information and that the laws on what is and what is not legal here are not completely black and white.

Even when it comes to hacking into products or computer systems, the legality of such an action may differ based upon what is done after the actual hack occurs. If, for example, a person is able to successfully break into a system that controls a medical device designed to essentially keep a person alive, they may or may not be on the verge of an illegal act. After hacking in, if the hacker then disables an active device that results in harm to or the death of a person, criminal charges may come into play. 

If instead of doing that, a hacker makes it publicly known that the medical device's security is compromised, it may not lead to a criminal offense even if that person ends up profiting by trading stocks that they knew would drop once the hack was exposed. In some way it might be said that the hacker was actually performing a public service by warning about a potential problem with the device.

People who are accused of white collar crimes might want to talk with an attorney in New York for better clarity on the laws in these areas. 

Source: Bloomberg, "Is Cyber-Insider Trading Illegal?," Matt Levine, February 2, 2018

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