A Critical Analysis of Misappropriation Theory in Insider Trading Cases

Under the present judicial interpretation of federal securities law, an individual is prohibited from trading on non-public information that has been misappropriated in contravention of a fiduciary duty. Trades made using non-public information that has not been misappropriated are not prohibited by...

Full description

Saved in:
Bibliographic Details
Published in:Business ethics quarterly 1992-10, Vol.2 (4), p.465-477
Main Author: Salbu, Steven R.
Format: Article
Language:English
Subjects:
Common law
Defendants
Efficient markets
Fraud
Information theory
Insider trading
Legal duty
Misappropriation
Plaintiffs
Trade legislation
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
cited_by cdi_FETCH-LOGICAL-c1654-756ba06c69c47948f67c1f81bc7cdd48aa9120a33f4aabe95395b0822c8cb2203
cites
container_end_page 477
container_issue 4
container_start_page 465
container_title Business ethics quarterly
container_volume 2
creator Salbu, Steven R.
description Under the present judicial interpretation of federal securities law, an individual is prohibited from trading on non-public information that has been misappropriated in contravention of a fiduciary duty. Trades made using non-public information that has not been misappropriated are not prohibited by Rule 10b-5, promulgated under the Securities and Exchange Act of 1934. The current requirement of misappropriation to trigger Rule 10b-5 liability creates a gap that permits transactions that are both ethically and economically undersirable. Judicial or legislative reforms are recommended to close the gap and help ensure the fairness and efficiency of securities markets.
doi_str_mv 10.2307/3857583
format article
fullrecord <record><control><sourceid>jstor_proqu</sourceid><recordid>TN_cdi_proquest_journals_1312002584</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><jstor_id>3857583</jstor_id><sourcerecordid>3857583</sourcerecordid><originalsourceid>FETCH-LOGICAL-c1654-756ba06c69c47948f67c1f81bc7cdd48aa9120a33f4aabe95395b0822c8cb2203</originalsourceid><addsrcrecordid>eNp90E1Lw0AQBuBFFKxV_AsLCp6i-5H9yLFErZWIFKJ4WzabjW6tSd1Jwf57IxGPnubyzPDOi9ApJZeME3XFtVBC8z00YVTwhHMm99GEEsESKsjLIToCWBFCaab5BM1nOI-hD86u8ay16x0EwF2DHwLYzSZ2mxhsH7oWl2--izscWrxoIdQ-4jLaOrSvOLfg4RgdNHYN_uR3TtHT7U2Z3yXF43yRz4rEUSnSRAlZWSKdzFyqslQ3UjnaaFo55eo61dZmlBHLeZNaW_lM8ExURDPmtKsYI3yKzsa7Q7bPrYferLptHIKDoXxYJUzodFAXo3KxA4i-McMfHzbuDCXmpyXz29Igz0e5gr6L_7BkZAF6__XHbHw3UnEljJwvTZE9l_fF8tos-Tes73Is</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>1312002584</pqid></control><display><type>article</type><title>A Critical Analysis of Misappropriation Theory in Insider Trading Cases</title><source>JSTOR Archival Journals and Primary Sources Collection</source><creator>Salbu, Steven R.</creator><creatorcontrib>Salbu, Steven R.</creatorcontrib><description>Under the present judicial interpretation of federal securities law, an individual is prohibited from trading on non-public information that has been misappropriated in contravention of a fiduciary duty. Trades made using non-public information that has not been misappropriated are not prohibited by Rule 10b-5, promulgated under the Securities and Exchange Act of 1934. The current requirement of misappropriation to trigger Rule 10b-5 liability creates a gap that permits transactions that are both ethically and economically undersirable. Judicial or legislative reforms are recommended to close the gap and help ensure the fairness and efficiency of securities markets.</description><identifier>ISSN: 1052-150X</identifier><identifier>EISSN: 2153-3326</identifier><identifier>DOI: 10.2307/3857583</identifier><language>eng</language><publisher>New York, USA: Cambridge University Press</publisher><subject>Common law ; Defendants ; Efficient markets ; Fraud ; Information theory ; Insider trading ; Legal duty ; Misappropriation ; Plaintiffs ; Trade legislation</subject><ispartof>Business ethics quarterly, 1992-10, Vol.2 (4), p.465-477</ispartof><rights>Copyright 1992 The Society for Business Ethics</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c1654-756ba06c69c47948f67c1f81bc7cdd48aa9120a33f4aabe95395b0822c8cb2203</citedby></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/3857583$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/3857583$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,776,780,27901,27902,58213,58446</link.rule.ids></links><search><creatorcontrib>Salbu, Steven R.</creatorcontrib><title>A Critical Analysis of Misappropriation Theory in Insider Trading Cases</title><title>Business ethics quarterly</title><description>Under the present judicial interpretation of federal securities law, an individual is prohibited from trading on non-public information that has been misappropriated in contravention of a fiduciary duty. Trades made using non-public information that has not been misappropriated are not prohibited by Rule 10b-5, promulgated under the Securities and Exchange Act of 1934. The current requirement of misappropriation to trigger Rule 10b-5 liability creates a gap that permits transactions that are both ethically and economically undersirable. Judicial or legislative reforms are recommended to close the gap and help ensure the fairness and efficiency of securities markets.</description><subject>Common law</subject><subject>Defendants</subject><subject>Efficient markets</subject><subject>Fraud</subject><subject>Information theory</subject><subject>Insider trading</subject><subject>Legal duty</subject><subject>Misappropriation</subject><subject>Plaintiffs</subject><subject>Trade legislation</subject><issn>1052-150X</issn><issn>2153-3326</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1992</creationdate><recordtype>article</recordtype><recordid>eNp90E1Lw0AQBuBFFKxV_AsLCp6i-5H9yLFErZWIFKJ4WzabjW6tSd1Jwf57IxGPnubyzPDOi9ApJZeME3XFtVBC8z00YVTwhHMm99GEEsESKsjLIToCWBFCaab5BM1nOI-hD86u8ay16x0EwF2DHwLYzSZ2mxhsH7oWl2--izscWrxoIdQ-4jLaOrSvOLfg4RgdNHYN_uR3TtHT7U2Z3yXF43yRz4rEUSnSRAlZWSKdzFyqslQ3UjnaaFo55eo61dZmlBHLeZNaW_lM8ExURDPmtKsYI3yKzsa7Q7bPrYferLptHIKDoXxYJUzodFAXo3KxA4i-McMfHzbuDCXmpyXz29Igz0e5gr6L_7BkZAF6__XHbHw3UnEljJwvTZE9l_fF8tos-Tes73Is</recordid><startdate>199210</startdate><enddate>199210</enddate><creator>Salbu, Steven R.</creator><general>Cambridge University Press</general><general>Society for Business Ethics</general><general>The Society</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>JRZRW</scope><scope>K30</scope><scope>PAAUG</scope><scope>PAWHS</scope><scope>PAWZZ</scope><scope>PAXOH</scope><scope>PBHAV</scope><scope>PBQSW</scope><scope>PBYQZ</scope><scope>PCIWU</scope><scope>PCMID</scope><scope>PCZJX</scope><scope>PDGRG</scope><scope>PDWWI</scope><scope>PETMR</scope><scope>PFVGT</scope><scope>PGXDX</scope><scope>PIHIL</scope><scope>PISVA</scope><scope>PJCTQ</scope><scope>PJTMS</scope><scope>PLCHJ</scope><scope>PMHAD</scope><scope>PNQDJ</scope><scope>POUND</scope><scope>PPLAD</scope><scope>PQAPC</scope><scope>PQCAN</scope><scope>PQCMW</scope><scope>PQEME</scope><scope>PQHKH</scope><scope>PQMID</scope><scope>PQNCT</scope><scope>PQNET</scope><scope>PQSCT</scope><scope>PQSET</scope><scope>PSVJG</scope><scope>PVMQY</scope><scope>PZGFC</scope></search><sort><creationdate>199210</creationdate><title>A Critical Analysis of Misappropriation Theory in Insider Trading Cases</title><author>Salbu, Steven R.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c1654-756ba06c69c47948f67c1f81bc7cdd48aa9120a33f4aabe95395b0822c8cb2203</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1992</creationdate><topic>Common law</topic><topic>Defendants</topic><topic>Efficient markets</topic><topic>Fraud</topic><topic>Information theory</topic><topic>Insider trading</topic><topic>Legal duty</topic><topic>Misappropriation</topic><topic>Plaintiffs</topic><topic>Trade legislation</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Salbu, Steven R.</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>Periodicals Index Online Segment 35</collection><collection>Periodicals Index Online</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - West</collection><collection>Primary Sources Access (Plan D) - International</collection><collection>Primary Sources Access &amp; Build (Plan A) - MEA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Midwest</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Northeast</collection><collection>Primary Sources Access (Plan D) - Southeast</collection><collection>Primary Sources Access (Plan D) - North Central</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Southeast</collection><collection>Primary Sources Access (Plan D) - South Central</collection><collection>Primary Sources Access &amp; Build (Plan A) - UK / I</collection><collection>Primary Sources Access (Plan D) - Canada</collection><collection>Primary Sources Access (Plan D) - EMEALA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - North Central</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - South Central</collection><collection>Primary Sources Access &amp; Build (Plan A) - International</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - International</collection><collection>Primary Sources Access (Plan D) - West</collection><collection>Periodicals Index Online Segments 1-50</collection><collection>Primary Sources Access (Plan D) - APAC</collection><collection>Primary Sources Access (Plan D) - Midwest</collection><collection>Primary Sources Access (Plan D) - MEA</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - Canada</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - UK / I</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - EMEALA</collection><collection>Primary Sources Access &amp; Build (Plan A) - APAC</collection><collection>Primary Sources Access &amp; Build (Plan A) - Canada</collection><collection>Primary Sources Access &amp; Build (Plan A) - West</collection><collection>Primary Sources Access &amp; Build (Plan A) - EMEALA</collection><collection>Primary Sources Access (Plan D) - Northeast</collection><collection>Primary Sources Access &amp; Build (Plan A) - Midwest</collection><collection>Primary Sources Access &amp; Build (Plan A) - North Central</collection><collection>Primary Sources Access &amp; Build (Plan A) - Northeast</collection><collection>Primary Sources Access &amp; Build (Plan A) - South Central</collection><collection>Primary Sources Access &amp; Build (Plan A) - Southeast</collection><collection>Primary Sources Access (Plan D) - UK / I</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - APAC</collection><collection>Primary Sources Access—Foundation Edition (Plan E) - MEA</collection><jtitle>Business ethics quarterly</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Salbu, Steven R.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>A Critical Analysis of Misappropriation Theory in Insider Trading Cases</atitle><jtitle>Business ethics quarterly</jtitle><date>1992-10</date><risdate>1992</risdate><volume>2</volume><issue>4</issue><spage>465</spage><epage>477</epage><pages>465-477</pages><issn>1052-150X</issn><eissn>2153-3326</eissn><abstract>Under the present judicial interpretation of federal securities law, an individual is prohibited from trading on non-public information that has been misappropriated in contravention of a fiduciary duty. Trades made using non-public information that has not been misappropriated are not prohibited by Rule 10b-5, promulgated under the Securities and Exchange Act of 1934. The current requirement of misappropriation to trigger Rule 10b-5 liability creates a gap that permits transactions that are both ethically and economically undersirable. Judicial or legislative reforms are recommended to close the gap and help ensure the fairness and efficiency of securities markets.</abstract><cop>New York, USA</cop><pub>Cambridge University Press</pub><doi>10.2307/3857583</doi><tpages>13</tpages></addata></record>
fulltext fulltext
identifier ISSN: 1052-150X
ispartof Business ethics quarterly, 1992-10, Vol.2 (4), p.465-477
issn 1052-150X
2153-3326
language eng
recordid cdi_proquest_journals_1312002584
source JSTOR Archival Journals and Primary Sources Collection
subjects Common law
Defendants
Efficient markets
Fraud
Information theory
Insider trading
Legal duty
Misappropriation
Plaintiffs
Trade legislation
title A Critical Analysis of Misappropriation Theory in Insider Trading Cases
url http://sfxeu10.hosted.exlibrisgroup.com/loughborough?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-02-01T00%3A52%3A59IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-jstor_proqu&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=A%20Critical%20Analysis%20of%20Misappropriation%20Theory%20in%20Insider%20Trading%20Cases&rft.jtitle=Business%20ethics%20quarterly&rft.au=Salbu,%20Steven%20R.&rft.date=1992-10&rft.volume=2&rft.issue=4&rft.spage=465&rft.epage=477&rft.pages=465-477&rft.issn=1052-150X&rft.eissn=2153-3326&rft_id=info:doi/10.2307/3857583&rft_dat=%3Cjstor_proqu%3E3857583%3C/jstor_proqu%3E%3Cgrp_id%3Ecdi_FETCH-LOGICAL-c1654-756ba06c69c47948f67c1f81bc7cdd48aa9120a33f4aabe95395b0822c8cb2203%3C/grp_id%3E%3Coa%3E%3C/oa%3E%3Curl%3E%3C/url%3E&rft_id=info:oai/&rft_pqid=1312002584&rft_id=info:pmid/&rft_jstor_id=3857583&rfr_iscdi=true