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Should A Possession Or Use Standard Be Employed To Prove Insider Trading?

San Diego Law Review

This Comment endorses the legislative adoption of an initial rebuttable presumption in favor of the complainant in insider trading cases. This presumption would create a strong inference of "actual use"

upon proof that the defendant was in possession of material and non- public information at the time he consummated a securities transaction.

Moreover, the inference would establish a prima facie case of insider trading sufficient to withstand summary judgment. This Comment argues that such a presumption is appropriate as it is consistent with the plain language of section 10(b) of the Securities Exchange Act of 19345

and SEC Rule lOb-5. …