for the purpose of benefitting the corporation o Insider Trading: trading on secret information when you’re not supposed to, 20 years in jail, $10 million fine, it is unlawful to use or employ in connection with the purchase/sale of any security any manipulative or deceptive device in contravention of such rules as the SEC may prescribe Have to prove 5 things: 1. Defendant bought/sold securities (stock) 2. They knew they were doing something wrong, with intent (scienter) 3. Did purchase on basis of 4. aterial, non public information 5. The trader owes a duty under the law to disclose or abstain —who has this duty? (page 139)
1. Company insiders, workers who shares are being traded (janitor to CEO) 2. Temporary insiders- not on payroll, but brought into the company (auditors, attorneys, bankers, consultants) 3. Misappropriator: if one company is getting bought by another, committing fraud on the source 4. Tipee: if any one related to the above 3 buys stock because of what they were told, both tipper and tippee are in trouble United States v. Anderson (2008) o Zomax a CD company knew they would fall short of their sales expectations and earnings o Anderson then began to liquidate all the shares he owned o Jury convicted Anderson of insider trading and gave him 30 months in prison, and owed a ton of money, he appealed o Anderson said the information was not material, and he did not trade on the basis of, and that it was not nonpublic information o Jury could find that he traded on the basis of nonpublic info, so the decision is affirmed! Granholm v. Heald (2005) o 2 plaintiffs from out of state filed lawsuits against the three tier system in Michigan and NY so that they could directly ship their wine to customers in those states o both won in local, appellate also won in Michigan but appellate case for NY guy lost o these cases got sent to the supreme court and consolidated o In Michigan, the state allows for in state wineries to ship directly so it’s discriminatory against other states o New York says they must develop a distribution operation in NY- technically the same as in state wineries o States say out of state direct shipment undermines their abilities to police underage drinking o There is no proof that direct shipment increases minor’s access o State’s tax collection argument was also stated insufficient o Both laws were invalidated Sorrell v. IMS Health, Inc (2011) o Pharmaceutical manufacturers promote their drugs to doctors through detailing- a scheduled visit to the office to persuade the doctor to prescribe a certain drug o They can be more persuasive when they know the doctor’s background and info “prescriber-identifying information” o Vermont passed a law against selling prescriber identifying info
o Data6 miners and manufacturers sued saying it violated freedom of speech, trial judge upheld the law so they appealed o Court of appeals reversed it, supreme court got it o The judgment of the court of appeals was affirmed, law invalid Kelo v. City of New London (2005) o
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