The Securities and Exchange Commission continues to maintain an aggressive effort against insider trading. The SEC brought 57 insider trading actions in the fiscal year ending Sept. 30, 2011. Much of the attention centered on the cases involving so-called expert networks and the government’s use of “blue-collar tactics,” such as wiretaps, that were traditionally associated with combating organized crime. But away from the headlines, the SEC has sought to extend the boundaries of insider trading law in ways that could have far-reaching consequences.

Insider trading

Insider trading is a violation of §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Insider cases generally fall into two categories. Under the classical theory, a person violates §10(b) and Rule 10b-5 when he trades securities on the basis of material, nonpublic information and is an insider of the corporation whose securities are traded, therefore violating a fiduciary duty owed to that corporation and its investors. Under the misappropriation theory, an individual violates §10(b) and Rule 10b-5 by trading in securities of a corporation in which the person is not an insider, on the basis of material, nonpublic information that has been misappropriated from another person or entity with whom there was a duty of trust or confidence that precluded the use of the information for personal benefit.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]