Andrew shares the differences between the misappropriation theory and the classical theory of See more +

Andrew shares the differences between the misappropriation theory and the classic insider trading theory. In the classical theory, liability is based on a breach of fiduciary duty, while misappropriation assumes liability on a breach of confidentiality in a way that encompasses people who would be considered outsiders to the company. Carpenter c. SEC paved the way for the court to recognize the theory of misappropriation.

Carpenter was a person who received information from a Wall Street Journal reporter and traded it with stock brokers, earning around $690,000. The SEC successfully argued in the lower court that Carpenter and his accomplices breached a duty of confidentiality to The Wall Street Journal based on the embezzlement theory.

Tune in to the #ClassroomInsiders podcast episode in Compliance Podcast Network to learn more about #AcknowledgingMisappropriationTheory. See less –