I received an email from a student re insider trading, specifically re what is a tippee. Take a look at my post a couple of years ago on the Supreme Court case of Salman v. US.
The Supreme Court clarified that “a tippee’s liability for trading on inside information hinges on whether the tipper breached a fiduciary duty by disclosing the information. A tipper breaches such a fiduciary duty, we held, when the tipper discloses the inside information for a personal benefit.”
The Supreme Court then said that a “close personal relationship” is enough as far a receiving a personal benefit.
Keep in mind that many cases require “scienter” i.e., bad intent, intent to avoid a law. Keep in mind also that the information must be “material non-public information.”
The student also asked whether the same transaction could also violate general securities laws, i.e., a sale of a security that is not registered and not otherwise exempt. Answer: Of course and that must be considered.
Prof Hayes UWLA 