Constructive Insider

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Constructive Insider

A person who is not considered an insider of a publicly-traded company but may still have access to nonpublic information that is expected to remain nonpublic. For example, a lawyer working for a firm retained by a publicly-traded company may be a constructive insider. Constructive insiders are expected to abide by the same rules as actual corporate insiders; that is, they may not reveal or profit from nonpublic information. The term was first used in the U.S. Supreme Court case Dirks vs. SEC.
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These constructive insiders "acquire the fiduciary duties of the true insider, provided the corporation expected the constructive insider to keep the information confidential.
In upholding the conviction of the columnist for securities fraud under Rule 1 Ob-5, the Second Circuit rejected the argument that the misappropriation theory only applies to information misappropriated by corporate or constructive insiders.
Abandoning the 'mosaic theory': why the 'mosaic theory' of securities analysis constitutes illegal insider trading and what to do about it
qualify as classical insiders or constructive insiders present no
investment bank who were constructive insiders of takeover bidder rather
Insider trading inside the beltway
not actually temporary or constructive insiders because the information
insider" (also known as a constructive insider or a quasi-insider).
Permanently reviving the temporary insider

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