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 …

Rakoff, Naftalis, and Brodsky Discuss the Gupta Insider Trading Case at Columbia Law School

On February 21, United States District Court Judge Jed S. Rakoff, federal prosecutor Reed Brodsky, and defense attorney Gary Naftalis, came together to discuss the Gupta insider trading case with Columbia Law School students in a seminar called Corporations in …

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Editor's Tweet: Gupta Case: Rakoff, Naftalis, and Brodsky Discuss at Columbia Law School

Insider Trading Rules Need Rationalization

The current scope of the insider trading prohibition is arbitrary and unrationalized. Both sides in the debate should be able to agree on this, as the current scope is at the same time both underinclusive and overinclusive. On the one hand, if a thief breaks into your office, opens your files, learns material, nonpublic information, and trades on that information, he has neither breached a fiduciary duty nor “feigned fidelity” to the source and is presumably immune from insider trading liability under current law. On the other hand, if an employee of an acquiring firm seeks to test out information about a potential target with a friend at a major investor in the target and that investor later acquires more stock in the target based on that conversation, it is possible under SEC v. Obus that the employee will be deemed to have violated Rule 10b-5 on theory that he made a gift of the information, even though no payment or economic benefit is paid to the alleged tipper. This is considerably grayer behavior than that of the thief. Thus, drawing lines so that the thief escapes liability, while the inquiring employee does not, seems morally incoherent. Nor are such lines doctrinally necessary.
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Editor's Tweet: Professor John C. Coffee, Jr. discusses the current scope of the insider trading prohibition and how it can be rationalized

“Fine Distinctions” in the Contemporary Law of Insider Trading

William Cary’s opinion for the SEC in In re Cady, Roberts & Co. built the foundation on which the modern law of insider trading rests.  Today, we have a stable framework of three distinct legal theories—the classical theory, the misappropriation …

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Editor's Tweet: Professor Donald Langevoort of Georgetown Law has posted his new paper on Insider Trading. It includes a discussion of SEC v. Obus.

Memories of Bill Cary

More than 30 years have passed since I completed the interviews for the first edition of The Transformation of Wall Street.

My interview with Bill Cary on October 28th and 29th, 1980 was particularly memorable.  I …

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Editor's Tweet: Famed securities law expert and historian Joel Seligman recounts his memories of SEC Chairman William L. Cary and his impact on the SEC