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Simple English definitions for legal terms

misappropriation theory of insider trading

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A quick definition of misappropriation theory of insider trading:

The misappropriation theory of insider trading is when someone trades stock in a company using secret information they got from someone else who trusted them. This is different from the classical theory of insider trading, which only applies when the trader works for the company they're trading stock in. The misappropriation theory says that it's still wrong to trade on secret information, even if you don't work for the company. The U.S. Supreme Court made this rule in a case called U.S. v. O'Hagan. The Securities and Exchange Commission (SEC) also has a rule called Rule 10b5-1 that says you can't trade on secret information.

A more thorough explanation:

The misappropriation theory of insider trading is a type of insider trading where an individual trades stock in a company they are not affiliated with, using material non-public information obtained through a breach of a fiduciary duty owed to the source of the information. This theory does not require that the seller owes a fiduciary duty to the company in whose stock they trade. Instead, the seller's knowledge of insider information alone is enough to create liability under Rule 10b-5.

For example, if a lawyer working on a merger between two companies shares confidential information about the deal with a friend who then trades stock in one of the companies, that friend could be liable under the misappropriation theory of insider trading. Even though the friend had no fiduciary duty to the companies involved, they used confidential information to trade securities.

The misappropriation theory of insider trading was established in the U.S. Supreme Court case U.S. v. O'Hagan in 1997. The court found a partner at a law firm liable for insider trading based on information he obtained from other partners at the firm working on a tender offer. The partner had no fiduciary duty to the companies involved, but the court found him liable because he used confidential information to trade securities.

The Securities and Exchange Commission (SEC) has since codified the misappropriation theory of insider trading in Rule 10b5-1, which prohibits trading on the basis of material non-public information.

Misappropriation | miscarriage (of justice)

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warning my discord pfp is fun lol and also i haven't changed my username since high school because i didn't feel like it 😭
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BulbasaurNoLikeCardio
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Yes the septum, so they don't feel weird or mess with breathing/running at all even when flipped in? At limit
snow
10:23
its been a quiet morning so far
LSDFan
10:23
i have no hope for today
JumpySubsequentDolphin
10:24
idk about septums, i only have nostril pierced @bulb
triplethread
10:24
snow i think we will prob hear back from kent the week of dec 1st
10:24
Past 10am and ....nothing
JumpySubsequentDolphin
10:24
I think UCLA a wave today no?
babycat
10:24
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What time have UCLA waves been at
Dkk
10:24
It's only 7:24 AM. We on the west coast control the time.
thismanatemyson
10:25
UCLA please save me
triplethread
10:25
snow if i dont get invited for an honors college interview i might freak
Dkk
10:25
11:22:24 AM PST, wave will come.
triplethread
10:26
dkk are u a boy or a girl
Dkk
10:26
Wizard 101 told me I was a boy wizard.
triplethread
10:26
ok
BulbasaurNoLikeCardio
10:26
I am thinking it will be slower/quitter until after thanksgiving
snow
10:27
thread im like 90% sure im getting an R, but ive come to peace that this might be my unreasonable R for the cycle
triplethread
10:27
but snow we have the same stats. you'll be fine. i promise. if im this confident you should be too
Dkk
10:27
Only tiktok I will share cus I stay off that site.
I am sorry if you like it, but TikTok is fucking awful
LSDFan
10:28
tiktok is great
triplethread
10:28
i lub tik tok and reddit and instantgram
Dkk
10:29
Nah, lol I hate it @texas. I remember when it was music.ly too and you used to have music.ly cringe compilations.
babycat
10:29
I do not have tiktok either because it makes my brain unhappy
10:29
how come i didnt get fordham AGAIN
Yeah, shit is awful. I have friends who spend hours a day on it
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