BUS. ORGS
BUS. ORGS
Tippee and Tipper liability
A person, not an insider, who trades on information received from an insider is a tippee and may be liable under rule 10b5 if 1. she received information through an insider who breached a fiduciary duty in giving the information, and 2. the tippee knew or should have known of the breach.
a. BREACH OF INSIDER'S FIDUCIARY DUTY
whether an insider's fiduciary duty was breached depends largely on whether the insider communicated the information to realize a gain or advantage. Accordingly, tips to friends or relatives and tips that are a quid pro quo for a past or future benefit from the tippee result in fiduciary breach. Note that if the tippee is liable, so too is the tipper.
Tippee and Tipper liability
A person, not an insider, who trades on information received from an insider is a tippee and may be liable under rule 10b5 if 1. she received information through an insider who breached a fiduciary duty in giving the information, and 2. the tippee knew or should have known of the breach.
a. BREACH OF INSIDER'S FIDUCIARY DUTY
whether an insider's fiduciary duty was breached depends largely on whether the insider communicated the information to realize a gain or advantage. Accordingly, tips to friends or relatives and tips that are a quid pro quo for a past or future benefit from the tippee result in fiduciary breach. Note that if the tippee is liable, so too is the tipper.
posted by Robert Smith at 11:50 AM
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