Columbia Law School
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insider trading
SEC Needs to Rewrite its 10b5-1 Safe Harbor Rules
While it is illegal for insiders to trade on material, non-public information, the SEC has created a safe harbor Rule 10b5-1 since October 2000, by allowing insiders to set up trading plans in advance of actual trading.[1] Since these …
Information-Dissemination Law: The Regulation of How Market-Moving Information Is Revealed
Corporate information that moves stock-market prices has long sat at the center of modern securities regulation in the United States. The Great Depression-era securities laws at the foundation of the field require much mandatory disclosure of this type of information. …
A Rule of Construction for Salman
The Supreme Court decided to consider the meaning of the personal benefit requirement in an insider trading case based on a tipping violation. It accepted review of the Ninth Circuit’s decision in United States v. Salman,[1] which reached …
Dark Side of Equity Gifts by Corporate Executives
They say that one should not look a gift horse in the mouth. We decided to go against this proverb and look carefully in the mouth of one such gift horse. After all, we still remember from high school reading …
Solving The Paradox of Insider Trading Compliance for Issuers
Regulators demand the impossible when they require issuers to design and implement an effective compliance program to guard against insider trading, a crime that neither Congress nor the SEC has defined with any specificity. This problem is then compounded by …
A Proposal to End Executive Manipulations of Incentive Compensation
Options backdating? Who would be so arrogant to be still backdating their options? It has been exactly ten years since the Wall Street Journal’s exposé on “lucky CEOs.”[1] The intriguing question though is whether the executives could resist temptation …
The Legality of Opportunistically Timing Public Company Disclosures in the Context of SEC Rule 10b5-1
Ever since the SEC adopted Rule 10b5-1in 2000 the rule has been the subject of controversy. Some have questioned its validity, others have claimed that it has been abused. The commentary that follows addresses one suspected abuse of Rule 10b5-1, …
Legal Expertise and Insider Trading
How does legal knowledge affect corporate insiders’ trading behavior? Do corporate insiders with law degrees trade differently from others? On the one hand, with a better understanding of regulations, legal insiders are more aware of the effects and risk of …
The Importance of “The Law of Conservation of Securities”: A Reply to John P. Anderson’s “What’s the Harm in Issuer-Licensed Insider Trading?”
Professor John P. Anderson’s article, What’s the Harm in Issuer-Licensed Insider Trading [1] argues that my “Law of Conservation of Securities” has no moral relevance to the question whether to allow such trading.
A stock market insider trade has two …
What’s the Harm in Issuer-Licensed Insider Trading?
I have argued that insider trading is morally harmless where the issuer approves the trade in advance and makes certain ex ante and ex post public disclosures.[1] I have also suggested that reforming the law to permit such issuer-licensed …
Defining The Undefined: What Should Be Considered Material, Nonpublic, Illegal Insider Information?
Our insider trading laws remind us of an old Churchill quote: It is a riddle, wrapped in a mystery, inside an enigma.[1] Insider trading laws have never defined what constitute illegal insider trading information. Yet, the statutory penalties for …
Are Exchange Trading Rules Effective for Mitigating Insider Trading Activities?
Are securities law and their enforcement effective at mitigating market manipulation activities, especially insider trading activities? The study ‘Exchange Trading Rules, Surveillance and Suspected Insider Trading’, forthcoming in the Journal of Corporate Finance, tries to answer this question with …
Holland & Hart discuss Newman Cert., A Potential Tipping Point For Insider Trading Liability
In recent years, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have zealously pursued potential insider trading. After a long string of high-profile successes, the government faces significant roadblocks created last year by the Second Circuit …
The Regulation of Outsider Trading in the EU and US
In a recent paper, I compare the legal treatment of outsider trading under US and EU law. Outsider trading can be defined as the sale or purchase of listed securities on the basis of material nonpublic information by individuals …
Dirks and the Genesis of Personal Benefit
In United States v. Newman, 773 F.3d 438 (2nd Cir. 2014), the Second Circuit overturned the insider trading convictions of two hedge fund managers who received material nonpublic information from public companies via an extended tipping chain. The …
News From California: The 9th Circuit and the SEC Challenge New York
This column will focus on two new and unrelated developments linked only by the fact that they both emanate from California: (1) the Ninth Circuit has handed down a significant decision on insider trading—United States v. Salman[1]—that disagrees …
Catching Insider Trading
Despite losing several high-profile cases, the U.S. Securities and Exchange commission (SEC) has committed itself to prosecuting insider trading, outlawed by a patchwork of rule-making and court decisions. In recent years, the SEC has filed record-numbers of insider trading actions, …
Application of the Federal Mail and Wire Fraud Statutes to Criminal Liability for Stock Market Insider Trading and Tipping
After the Supreme Court’s unanimous decision in Carpenter v. United States,[1] the federal mail and wire fraud statutes became potent prosecutorial weapons against insider trading when the information-owner is the victim. This post examines how criminal liability under the …
Akin Gump discusses SDNY Decision Allowing SEC Insider Trading Case to Proceed, Distinguishing Newman
A recent decision from the United States District Court for the Southern District of New York allowing a U.S. Securities and Exchange Commission (SEC) civil enforcement action to proceed against two former stockbrokers for alleged insider trading violations sheds additional …