Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Business Crimes BulletinKickerFeaturesTopicsLitigationSectionsNewsLJN Newsletters

The Personal Benefit Test in Misappropriation Cases

By Jodi Misher Peikin and James R. Stovall
February 27, 2012

Like many aspects of insider trading law, the personal benefit test is deceptively straightforward. In tipping cases brought under the “classical” theory of insider trading, corporate insiders who disclose material nonpublic information, and persons who receive the information and trade based on it, are liable for securities fraud only if the tipper received a personal benefit in exchange for sharing the information. But almost 30 years after the test was first articulated, questions remain: Is the benefit test a separate element of liability or an aspect of another element, like breach of duty or scienter? And what counts as a sufficient “benefit”?

Those uncertainties have contributed to a greater controversy: whether the benefit test applies in tipping cases brought under the misappropriation theory. Prosecutors and regulators argue that it does not, and some courts have agreed. But careful examination of the purpose for the test and the requirements of misappropriation liability suggests that the government's opposition is misguided.

This premium content is locked for LJN Newsletters subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

Use of Deferred Prosecution Agreements In White Collar Investigations Image

This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.

The DOJ's New Parameters for Evaluating Corporate Compliance Programs Image

The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.

CLE Shouldn't Be the Only Mandatory Training for Attorneys Image

Each stage of an attorney's career offers opportunities for a curriculum that addresses both the individual's and the firm's need to drive success.

A defendant in a patent infringement suit may, during discovery and prior to a <i>Markman</i> hearing, compel the plaintiff to produce claim charts, claim constructions, and element-by-element infringement analyses.