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A Note on Insider Trading

Freeman, R. Edward...

Technical Note

A Note on Insider Trading

Freeman, R. Edward; Wicks, Andrew C.; Villa, Rebecca L.

E-0069 | Published February 20, 1990 | 9 pages Technical Note

Collection: Darden School of Business

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The action of insider trading is examined in its legal perspective--namely, as fraud. The proof of insider trading hinges on several factors including the definition of nonpublic information, the action of an insider who is consciously trading or enabling others to trade on inside information, and the breach of fiduciary responsibility. The "test of scienter" requires the deliberate attempt to deceive, manipulate, or defraud. This note examines several court cases in relation to these factors.

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