"This is a case first impression and one of signal importance in our administration of the Federal securities acts." With those words just over fifty years ago in Cady, Roberts, a Securities and Exchange Commission ("SEC") adminitrative proceeding, Chariman William L. Cary began the first insider trading decision ever issued under the federal securities laws.
The vast majority of insider trading cases over the decades following Cady, Roberts have adhered to Cary's basic analysis. However over the last several years, the SEC and the Department of Justice ("DOJ") have pushed their insider trading enforcement programs in new and increasingly aggressive directions. Where courts have agreed with the SEC and DOJ, this has resulted in new, and sometimes expansive and unpredictable takes on the familiar elements of duty, materiality, and scienter laid out by Cary. These cases on the cutting edge point to where the law of insider trading is likely headed over the decade ahead. But as discussed below, they have also created uncertainty as to where the line of liability presently exists.
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