About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

62 Geo. Wash. L. Rev. 432 (1993-1994)
Reconsideration of the Disgorgement Remedy in Tipper-Tippee Insider Trading Cases

handle is hein.journals/gwlr62 and id is 440 raw text is: Note A RECONSIDERATION OF THE DISGORGEMENT REMEDY IN TIPPER-TIPPEE INSIDER TRADING CASES John K. Robinson Introduction Most things in law, and particularly in the law of equity, make sense. In fact, the law's attempt to reflect reality accurately should cause us to look closely for justification when the resolution of a legal question does not make sense. Andjust as important, when the reality underly- ing a formerly sensible rule changes, it is fundamental that the law should change to keep pace.' Both the courts and the Securities and Exchange Commission (SEC or Commission) have violated this fundamental rule with respect to disgorgement in insider trading cases under the federal securities laws. They have, in effect, crafted their own definition of disgorge- ment. Courts have long held that trading on the basis of material nonpublic information while in a position of responsibility is a viola- tion of section 10(b) of the Securities Exchange Act of 1934 (the 1934 Act),2 and Rule lOb-53 promulgated thereunder.4 This makes sense. The SEC, however, has demanded that a person who feeds material nonpublic information (the tipper) gratis to another person who 1. CASS R. SUtsMrIN, THE PARTIAL CONSTITUTION 349 (1993) (arguing that the status quo can be justified only to the extent that reasons [can] be offered on its behalf); see ROBERT H. BoarK, THE ANTrrRuST PARADoX 3-8 (1978) (arguing successfully that the law of antitrust often made little sense and needed to he changed). 2. 15 U.S.C. § 78j (1988). Section 10(b) provides: March 1994 Vol. 62 No. 3

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most