Insider Trading
Business Associations · Lesson 10
Insider Trading
這一課問的是：D 之行為是否依古典、挪用、提示理論構成內幕交易？
ActorActObjectStandardConsequence
Issue · what this lesson is really about
Has D engaged in insider trading actionable under the classical, misappropriation, or tipping theory?
這一課問的是：D 之行為是否依古典、挪用、提示理論構成內幕交易？
Trigger words & phrases that should flag this issue:
nonpublic informationtippertippeefiduciary dutymisappropriation
Core Terminology · 7 must-know
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classical theory
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Insider trades on material nonpublic info breaching fiduciary duty to shareholders.
古典理論。
misappropriation theory
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Outsider trades on info obtained in breach of duty to source.
挪用理論。
tipper-tippee
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Insider passes info; recipient trades.
提示者-被提示者。
personal benefit
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Tipper must receive direct or indirect personal benefit.
個人利益。
scienter
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Knowledge or recklessness re duty breach.
知情。
disclose or abstain
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Insider must disclose info or abstain from trading.
揭露或不交易。
Section 16
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Short-swing profit recovery rule.
§16 短期利潤。
Rule Sentence · the workhorse
Insider trading is actionable under Rule 10b-5 via the classical theory (corporate insider trades on material nonpublic info in breach of fiduciary duty to shareholders), the misappropriation theory (outsider trades on info obtained in breach of duty to source), or tipper-tippee liability (tipper discloses for personal benefit; tippee aware of breach).
Sentence Anatomy · 5 roles, 5 colors
Every rule sentence breaks into five visual roles.
Actor 行為人insider or tippee內部人或被提示者
Act 行為trading on MNPI以重要非公開資訊交易
Object 對象securities證券
Standard 法律標準classical · misappropriation · tipping古典 / 挪用 / 提示
Consequence 後果civil + criminal liability民刑事責任
Casebook Snapshot · a real American case
Dirks v. SEC
Holding. A tippee inherits the tipper's duty only if (1) the tipper breached a fiduciary duty by disclosing the information, (2) the tipper received a personal benefit from the disclosure, and (3) the tippee knew or had reason to know of the breach.
Why it matters. Dirks set the tipper-tippee liability framework — personal benefit is the key.
Dirks：提示者-被提示者責任以個人利益為核心。
Common Mistakes · what trips students
✗ insider trading 須交易實際發生。
✓ Attempted insider trading not always required.
未遂未必要求。
✗ personal benefit 必須現金。
✓ Includes friendship gifts, reputational benefit.
友誼贈與、聲譽亦算。
Mini IRAC · build the Application
Issue. Is a corporate director liable under Rule 10b-5 when she traded her company's stock after learning of an unannounced acquisition?
Rule. Under the classical theory of insider trading, a corporate insider who trades on material nonpublic information in breach of fiduciary duty to shareholders violates Rule 10b-5.
Application (model). The director learned of the unannounced acquisition through her position and traded before public disclosure. Because the classical theory holds insiders accountable for trading on material nonpublic information in breach of fiduciary duty to shareholders, the fact that the director possessed material nonpublic info and traded before public disclosure means she breached her duty to disclose or abstain.
Pick the right element for each blank:
g1.
g2.
g3.
Conclusion. Therefore, the director is liable under Rule 10b-5 for insider trading.
MBE Check · multiple choice
A friend (not employee) of a CEO learns of an unannounced merger over dinner. The CEO mentioned it casually — receiving no money or benefit. The friend trades. Liable as tippee?
Practice Drill · tap to build the rule
Drop the chips here in correct order:
Tap chips to add → tap chips in the target to remove: