
Explaining Dirks
Dirks v. SEC established the fraud claim for tipping as part of the insider trading prohibition in the federal securities laws. An essential element of the claim was proof that the insider personally benefited from disclosing confidential information to the tippee.
A paragraph in Dirks explained the personal benefit test. The paragraph said that an insider needed to receive cash, reciprocal information, or other things of value but went on to say that certain fact patterns often created an inference that the insider expected to receive a personal benefit. Those fact situations included the insider’s gift of information to a … Read more