Securities Law Commons^™

Sec V. Bauer: If The Glove Fits, It's Insider Trading, Kramer Ortman

Catholic University Law Review

Until SEC v. Bauer, insider trading has never been applied within the context of an open-ended mutual fund. In alleging insider trading against Jilaine Bauer, an account executive of a mutual fund, the SEC originally won summary judgment; however, the case on appeal saw the SEC drop its original theory, the classical theory of insider trading, in favor of the alternative misappropriation theory. This Note argues that the misappropriation theory applies in the context of open-ended mutual funds by recognizing that the policy reasons underlying the prohibitions against insider trading are centered on the principles of fairness, market integrity, …