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Securities Fraud and Rule 10b-5 (Securities Law Series) LandMark Publications

Securities Fraud and Rule 10b-5 (Securities Law Series)

LandMark Publications

Published June 29th 2014
ISBN :
Kindle Edition
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 About the Book 

Featuring a New Section with Brief Summaries of the CasesTHIS CASEBOOK contains a selection of 221 U. S. Court of Appeals decisions that analyze and interpret the provisions of § 10(b) of the Exchange act and of Rule 10b-5, both of which apply toMoreFeaturing a New Section with Brief Summaries of the CasesTHIS CASEBOOK contains a selection of 221 U. S. Court of Appeals decisions that analyze and interpret the provisions of § 10(b) of the Exchange act and of Rule 10b-5, both of which apply to any fraudulent conduct in connection with the purchase or sale of any security. The selection of decisions spans from 2003 to the date of publication.Under the traditional or classical theory of insider trading liability, § 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] are violated when a corporate insider trades in the securities of his corporation on the basis of material, nonpublic information. United States v. OHagan,521 U.S. 642, 651-52 (1997). Thus, a corporate insider must abstain from trading in the shares of his corporation unless he has first disclosed all material inside information known to him. Chiarella v. United States,445 U.S. 222, 227 (1980). [I]f disclosure is impracticable or prohibited by business considerations or by law, the duty is to abstain from trading. SEC v. Obus,693 F.3d 276, 285 (2d Cir. 2012). Steginsky v. Xcelera Inc.,(2nd Cir. 2014)To establish an insider trading claim, it is not necessary to show that corporate insiders usedthe nonpublic information- it is sufficient to prove that they traded their corporations securities while knowingly in possession of the material nonpublic information. United States v. Rajaratnam,719 F.3d 139, 159 (2d Cir. 2013) (internal quotation mark omitted) (quoting United States v. Teicher,987 F.2d 112, 119 (2d Cir. 1993)). Additionally, the Supreme Court has dispensed with a requirement of positive proof of reliance, where a duty to disclose material information had been breached, concluding that the necessary nexus between the plaintiffs injury and the defendants wrongful conduct had been established. Basic Inc. v. Levinson,485 U.S. 224, 243 (1988)- see also Stoneridge Inv. Partners, LLC v. Scientific-Atlanta,552 U.S. 148, 159 (2008). Steginsky v. Xcelera Inc., ibid.* * *The Private Securities Litigation Reform Act (PSLRA) provides that a plaintiff bringing a securities fraud claim must, at the pleading stage,specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.15 U.S.C. § 78u-4(b)(1)(B). Thus, plaintiffs asserting claims under Rule 10b-5 must do more than say that the statements . . . were false and misleading- they must demonstrate with specificity why and how that is so. Rombach v. Chang,355 F.3d 164, 174 (2d Cir. 2004). Carpenters Pension Trust Fund of St. Louis v. Barclays PLC, (2nd Cir. 2014)