Class 25 Insider trading_bb

Class 25 Insider trading_bb - Corporations Business...

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Corporations Business Organizations
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Today Finish insider trading O’Hagan Problems
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Overview so far State common law: no duty to disclose or abstain absent special circumstances SUBSUMED BY FEDERAL SECURITIES LAWS Equal access theory (Texas Gulf Sulphur) ANYONE who has material nonpublic information has a duty to disclose or abstain NOT CURRENT LAW Fiduciary Duty Theory (Chiarella) Only those who owe a fiduciary duty to the
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Is there a 10b-5 violation in the following cases? I overhear a CEO telling his wife that he will be out of town the following week because his company might be liquidated. I trade on that information. SEC v. Switzer , 590 F. Supp. 756 (W.D. Okla. 1984) The CEO approaches an investor about investing in a joint venture with his company. In the process, the CEO gives out material non-public information
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Regulation Fair Disclosure (FD) Passed in 2000 Deals with selective disclosure of information to professional analysts and investors If someone acting on behalf of a public corporation discloses material nonpublic information to securities market professionals or holders of securities who may well trade based on that information, the issuer must also disclose that information to the public.
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§ 14(e) Securities and Exchange Act Prohibits insiders of bidder and target from divulging confidential information about a tender offer to persons that are likely to trade on the information. No fiduciary relationship requirement Prohibited from trading on information if knows information is nonpublic, and that source of information is insider from offering party or target party
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Dealing with Chiarella
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Class 25 Insider trading_bb - Corporations Business...

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