Legal History Commons^™

Constructive Ambiguity And Judicial Development Of Insider Trading, Jill E. Fisch

All Faculty Scholarship

The Texas Gulf Sulphur decision began what has become a fifty-year project of developing U.S. insider trading regulation through judicial lawmaking. During the course of that project, the courts developed a complex, fraud-based approach to determining the scope of liability. The approach has led, in many cases, to doctrinal uncertainty, a result that is reflected in the recent decisions in Newman, Salman, and Martoma.

n the face of this uncertainty, many commentators have called for a legislative solution. This article argues, however, that the true challenge of insider trading regulation is a lack of consensus about the …

Dirks And The Genesis Of Personal Benefit, Adam C. Pritchard

Articles

In United States v. Newman, 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 Newman court interpreted the Supreme Court's decision in Dirks v. SEC as requiring that the government prove: (1) that the tippee knew that the tipper was disclosing the information in exchange for a personal benefit; and (2) that if the personal benefit does not involve a quid pro quo to the tipper, that the disclosure arise from a "meaningfully close personal relationship" with the recipient of the …