NCJ Number
131411
Date Published
1987
Length
14 pages
Annotation
This report discusses major Federal cases interpreting the application of the major antifraud provision of the Securities Exchange Act of 1934 to insider trading violations.
Abstract
Neither the law nor Rule 10b-5 explicitly prohibits insider trading. However, the rule has been invoked in many proceedings involving many different situations in the 40 years since its adoption. Specific cases have involved the purchase of shares by directors from shareholders after the directors had already made plans to sell a corporation's assets for a substantial profit and sales of shares by directors before making public the decision to cut the stock's dividend. Further cases have extended the application of the law beyond officers, directors, and major stockholders to anyone who receives information from a corporate source. Recent decisions have narrowed the application of the law. A current case will involving whether and to whom a newspaper writer owes a fiduciary duty. Footnotes