Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Insider Trading: It's Not Just for Suits
On Sept. 30, 2010, the SEC brought an insider trading case against two railroad employees and their relatives, alleging that the defendants reaped more than $1 million in illegal gains by trading on nonpublic information about the planned takeover of the railroad company. SEC v. Steffes, No. 01 Civ. 06266 (N.D. Ill. Sept. 30, 2010). The SEC alleges that the employees traded and tipped on observations made on the job, including seeing people in suits tour the rail yards, hearing coworkers discuss the possible sale of their company, and being asked to prepare asset valuations. Critics complain this is an unfair case of Goliath versus David, where the SEC is going after low-level employees who turned a hunch about the sale of their company into a profit.
The Steffes complaint reminds us that the prohibition on insider trading applies to everyone, not just to hedge-fund managers and financiers. The securities laws forbid any transacting party ' rich or poor, sophisticated or unsophisticated ' with an illegal informational advantage over an unknowing counterparty from making a profit by exploiting that counterparty's ignorance. The rub is the word “illegal,” as trading on nonpublic information does not necessarily violate the law. This informational advantage often arises where an employee (at any level) learns something through his employment that he is duty-bound to protect. Setting aside the highly fact-specific question of whether information is material ' which the SEC will have to prove in the Steffes case ' the baseline of any insider trading inquiry is whether one who trades on or is tipped about alleged material nonpublic information owes a fiduciary duty to the source of the information to keep it confidential.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.