insider trading

The use of material, nonpublic information in trading the shares of a company by a corporate insider or other person who owes a fiduciary duty to the company.

• This is the classic definition. The Supreme Court has also approved a broader definition, known as the “misappropriation theory”: the deceitful acquisition and misuse of information that properly belongs to persons to whom one owes a duty. Thus, under the misappropriation theory, it is insider trading for a lawyer to trade in the stock of XYZ Corp. after learning that a client of the lawyer’s firm is planning a takeover of XYZ. But under the classic definition, that is not insider trading because the lawyer owed no duty to XYZ itself.

— Also termed insider dealing. [Cases: Securities Regulation 60.28. C.J.S. Securities Regulation §§ 179, 182.]

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词条贡献者

双语律师Akira，国际知名法学院法律专业，擅长翻译各类与地产开发相关的法律文件。