Question

List the elements the court requires for proof of insider trading.

(short and to the point)

Answer 1

Buying or selling a security while in possession of confidential, non-public information that violates a obligation not to trade. Insider exchange law has evolved by judicial interpretation of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 under the Exchange Act and Securities and Exchange Commission (SEC) regulations.

The SEC, the client, or a corporate shareholder can prosecute an insider trading lawsuit. A common argument for insider trading includes proof of those elements:

The defendant had access to “material” information;

The information was “non-public”;

The defendant purchased or sold the company’s security;

The transaction was “based on” the inside information

There was a breach of the duty of trust or confidence; and.

The defendant acted with “scienter