The government has characterized insider trading as a significant threat to the integrity of U.S. securities markets.1 But determining what constitutes insider trading can prove to be a challenging exercise. One area of particular difficulty involves the misappropriation theory of insider trading, where it is frequently unclear what types of relationships among the individuals involved give rise to liability.
This article will explore recent insider trading cases and highlight the legal contours that are still being developed in this area of law. In particular, it will focus specifically on two recent cases applying the misappropriation theory, comparing the facts and nuances of each case to better understand which scenarios might give rise to a “duty of trust or confidence” whose breach can trigger insider trading liability under §10(b) of the Securities Exchange Act of 1934.
