Uncorporate Insider Trading

50 Pages Posted: 3 Apr 2019 Last revised: 13 Apr 2019

See all articles by Peter Molk

Peter Molk

University of Florida Levin College of Law

Date Written: March 12, 2019


Insider trading restrictions rely on the existence of fiduciary duties. Developed at a time when company executives owed mandatory fiduciary duties to the company and its owners, the fiduciary duty requirement is routinely satisfied for a range of quintessential insider trading situations. However, new “uncorporate” entity forms – limited liability companies and limited partnerships – have recently arisen that allow for the complete elimination of all management’s fiduciary duties. When fiduciary duties disappear, so too does classical insider trading liability. For these entities, several of which are major publicly traded companies, traditional insider trading restrictions apparently no longer apply.

This Article assesses the problem and shows how many of the policy arguments that historically justified insider trading liability continue to support that liability among alternative entities. At the same time, critical differences between uncorporate entities and standard corporations may justify limiting insider trading liability among alternative entities in some circumstances. I consider a variety of ways to accomplish these goals.

Keywords: insider trading, llcs, lps, fiduciary duties

JEL Classification: K12, K22

Suggested Citation

Molk, Peter, Uncorporate Insider Trading (March 12, 2019). 104 Minnesota Law Review (2020 Forthcoming). Available at SSRN: https://ssrn.com/abstract=3351200

Peter Molk (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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