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http://ssrn.com/abstract=1335494
 
 

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Insider Trading and the Gradual Demise of Fiduciary Principles


Donna M. Nagy


Indiana University Maurer School of Law


Iowa Law Review, Vol. 94, p. 1315, 2009
Indiana Legal Studies Research Paper No. 123

Abstract:     
Recent SEC enforcement actions, such as the case filed against Dallas Mavericks' owner Mark Cuban, raise the question whether deception by a fiduciary is essential to the Rule 10b-5 insider trading offense. Under the Supreme Court's classical and misappropriation theories, the answer is clearly yes - each theory has a fiduciary principle at its core. Yet lower courts and the SEC frequently disregard the Court's explicit dictates, and a consensus is emerging that insider trading rests simply on the wrongful use of material nonpublic information, regardless of whether a fiduciary-like duty is breached. Although this view of insider trading can be justified by the policy objectives underlying the Court's decision in United States v. O'Hagan, it currently lacks a solid doctrinal foundation. To resolve this anomaly, this Article offers specific suggestions that would bring much needed coherence and legitimacy to the law of insider trading.

Number of Pages in PDF File: 66

Keywords: insider trading, fiduciary duty, Rule 10b5-1, Rule 10b5-2, securities fraud, O'Hagan

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Date posted: January 31, 2009 ; Last revised: July 1, 2013

Suggested Citation

Nagy, Donna M., Insider Trading and the Gradual Demise of Fiduciary Principles. Iowa Law Review, Vol. 94, p. 1315, 2009; Indiana Legal Studies Research Paper No. 123. Available at SSRN: http://ssrn.com/abstract=1335494

Contact Information

Donna M. Nagy (Contact Author)
Indiana University Maurer School of Law ( email )
211 S. Indiana Avenue
Bloomington, IN 47405
United States
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