U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20349 / October 30, 2007
SEC v. Oleksandr Dorozhko, Civil Action No. 07-CV-9606 (NRB) (S.D.N.Y.) (filed October 29, 2007)
SEC Obtains TRO and Asset Freeze Against Foreign Defendant for Unlawful Trading
On October 29, 2007, the Securities and Exchange Commission obtained a temporary restraining order, asset freeze, and other emergency relief from the United States District Court for the Southern District of New York against Oleksandr Dorozhko, a Ukrainian citizen. The Commission's Complaint, filed on the same date, alleges that Dorozhko engaged in unlawful trading in the securities of IMS Health Incorporated. The Court's Order, among other things, temporarily bars Dorozhko from violating the antifraud provisions of the federal securities laws and freezes Dorozhko's assets held in the United States.
The Commission's Complaint alleges that just hours before the close of the market on October 17, 2007, Dorozhko, while in possession of material nonpublic information regarding the impending announcement of negative earnings by IMS Health, purchased 300 Oct 25 out-of-the-money and 330 Oct 30 at-the-money put options on the common stock of IMS Health which would expire on October 20, 2007, just three days later. According to the Complaint, after the market closed on October 17, 2007, IMS Health reported third quarter earnings of $0.29 per share, which was 28% below analysts' consensus estimates of $0.40 earnings per share and 15% below the previous year's third quarter earnings of $0.34 per share. The Commission alleges that on October 18, 2007, IMS Health's stock price fell to a low of $21.20 per share or 28% from the previous day's closing price. On the same date, Dorozhko sold all of his IMS Health put options and realized proceeds of $328,000 and profits of $287,346 according to the Commission's Complaint.
The Commission charged Dorozhko with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In its Complaint, the Commission seeks a permanent injunction, civil money penalties, an accounting, and disgorgement of all ill-gotten gains realized by Dorozhko plus prejudgment interest.