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Misappropriation Theory As A Permissible Basis Of Section 10(B) Liability, The, Heather L. Reinsch

Missouri Law Review

Whether the misappropriation theory is a permissible basis for liability under section 10(b) of the Securities Exchange Act is an issue that has split the U.S. Courts of Appeals. The issue turns on the statutory interpretation of section 10(b) and Rule 10b-5, as well as policy considerations. The Supreme Court finally settled the issue in United States v. O'Hagan, when it reversed the Eighth Circuit and permitted the United States government to base section 10(b) liability on the misappropriation theory. The effect of the Court's decision is to make a person liable under section 10(b) if he received material and …