“Insider Trading – The Case of Chiarella v. United States Most insider trading cases involve facts that are relatively simple, and those at issue in Chiarella v. United States, 445 U.S. 222 (1980), are no exception. The defendant was an employee of a financial printing firm hired to print announcements of takeover bids. He managed on several occasions to deduce from code names the identities of the actual companies, and then surreptitiously purchased stock in the acquisition targets—reaping a $30,000 profit after the deals were announced. He was tried before a jury and convicted of a criminal violation of SEC Rule 10b-5. But after losing his appeal to the Second Circuit, he ultimately prevailed before the U.S. Supreme Court in March 1980. The divided Court’s iconic ruling, as to the circumstances under which insider trading constitutes securities fraud, continues to define the law’s contours right up to the present day.”
– Donna M. Nagy
