29) We will come to appreciate, however, that the chief concern for tippees is whether the tipper receives a personal benefit from their tip.
For example, the Court explained "that the Government has not cited, nor have we found, a single case in which tippees as remote as Newman and Chiasson have been held criminally liable for insider trading.
Rather, the information must have been disclosed improperly and the tippee must (or should) know so.
A tippee assumes a fiduciary duty to the shareholders of a corporation not to trade on material nonpublic information only when the insider has breached his fiduciary duty to the shareholders by disclosing the information to the tippee and the tippee knows or should know that there has been a breach.
So, were Newman and Chiasson guilty of violating the rules against insider trading under a theory of tippee liability?
The court held that for tippee liability to exist, the tipper must have gained substantial personal benefit from giving the tip, and the tippee must have knowledge about that substantial personal gain.
While the landscape of insider trading law continues to evolve, the broad anti-fraud provisions of Section 10(b) and Rule 10b-5 make clear that those who misappropriate material nonpublic information, either as tippers or tippees
, will likely be liable for insider trading.
Tippers and Tippees
do not exchange any personal information, making Ziptip completely confidential, just like cash.
to face a higher risk of criminal prosecution than do tippees
These extend insider liability beyond fiduciaries and their tippees
to others, who incur liability if
and their insider tippers are also liable under Rule 10b-5.
In doing so, the three-judge panel criticized the government for a blitz of Manhattan insider trading prosecutions that resulted in more than 80 convictions since 2008, citing the ''novelty of its recent insider trading prosecutions, which are increasingly targeted at remote tippees
many levels removed from corporate insiders.