Martoma, (13) a criminal insider trading appeal in which the defendant unsuccessfully argued that the lack of a "meaningfully close personal relationship" between a putative insider trading tipper and tippee
represents a barrier to liability.
's knowledge that this personal benefit test was satisfied,
In Cady, Roberts, the SEC opined that "information intended to be available only for a corporate purpose" must also "not [be] for the personal benefit of anyone," (28) This applies to the tipper, the tippee
, and even the elusive second- and third-level (and beyond) "remote tippees
." (29) We will come to appreciate, however, that the chief concern for tippees
is whether the tipper receives a personal benefit from their tip.
SEC (1983) that to be found guilty of insider trading, the receiver of the tip--the "tippee
"--must know (or at least should know) that the source tipper violated a fiduciary duty or similar obligation--for example, to an employer--in disclosing material nonpublic information.
So, were Newman and Chiasson guilty of violating the rules against insider trading under a theory of tippee
Tippers transact tips instantly just by scanning (with their phones) a Tippee
's business card, T-shirt, workstation or other product displaying a Tippee
's unique Medallion image, including one posted online, using the free Ziptip apps for iPhone and Android.
two variations, the most tangential cases, unintended tippees
are people with no fiduciary obligation to the company to whom an insider discloses material nonpublic information.
and their insider tippers are also liable under Rule 10b-5.
In England, Switzerland, France, the Low Countries, Japan, and in many other lesser financial centers, laws have been adopted that are intended to penalize at least the grosser kinds of insider trading, that of corporate insiders and their tippees
(5) the Second Circuit endorsed the SEC's views in Matter of Cady, Roberts & Co., finding that trading on inside corporate information by corporate insiders and their tippees
violated the antifraud provisions by allowing insiders to profit from their special access to sensitive information.
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.'' The court said prior cases generally involved tippees
directly participating in the passing of secrets.