40 Am. Crim. L. Rev. 1041 (2003)
Securities Fraud

handle is hein.journals/amcrimlr40 and id is 1051 raw text is: SECURITIES FRAUD
I.  INTRODUCTION  ........................................  1041
II. ELEMENTS OF THE OFFENSE ...............................  1043
A. Substantive Fraud ................................... 1045
1. Material Misrepresentations and Omissions ............ 1045
a. Misstatements and Omissions .....................  1046
b.  M ateriality . ..................................  1047
c.  Intent . ......................................  1049
i.  Scienter . .................................  1049
ii.  W illfulness . ...............................  1050
d.  Reliance . ....................................  1051
e.  Entanglement Liability ..........................  1052
2.  Insider Trading ..................................  1054
a.  The Classical Theory ...........................  1055
b. The Misappropriation Theory ..................... 1057
c. Strict Regulation Under Rule 14e-3 of Non-public
Information Regarding Tender Offers ............... 1060
d. Use Versus Knowing Possession of Inside Information . . 1060
B. Defining Offer, Purchase, or Sale of a Security ............. 1062
1. Definition of  Security .............................  1062
a. Stocks and Notes Lacking a Profit Motive ............ 1064
b. Instruments Protected by Other Federal Legislation .... 1068
c. Instruments Deemed Investment Contracts or
Certificates of Interest ..........................  1069
i.  Investment of Money  ........................  1070
ii. A  Common Enterprise .......................  1071
iii. Expectation of Profits ........................ 1073
iv. Solely Through the Efforts of Others ............. 1074
2. Definition of Offer and Sale: The 1933 Act ......... 1075
3. Definition of Purchase and Sale : The 1934 Act ...... 1076
C. Use of Interstate Commerce or the Mails ................. 1078
III.  D EFENSES  ...........................................  1079
A.  Intent-Based  Defenses ...............................  1079
1. Lack of Fraudulent Intent ..........................  1080
2. No Knowledge of the Substantive Rule ............... 1081
3.  Good  Faith .....................................  1082
4. Reliance on Advice of Counsel ......................  1083
B. Reliance-Based Defenses .............................  1084
1.  Truth  on  the M arket ..............................  1084
2. Bespeaks Caution Doctrine .........................  1086

1041

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