United States v. O'Hagan case brief

United States v. O’Hagan (1997)

• O’Hagan is a partner at Dorsey & Whitney.
• Dorsey & Whitney represent Grand Met, which is considering a take over bid for Pillsbury.
• O’Hagan does not work on the deal, but knows about it and buys Pillsbury stock and makes over $4 million once the takeover happens.
• The stock in which he traded was not the stock of his firm’s client, which was Grand Met. He traded in the shares of Pillsbury to which he owed no duty.
• Misappropriation theory holds that a person violates Rule 10b-5 when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information.
• If a fiduciary discloses to the source that he plans to trade on the nonpublic information, there is no violation, although the fiduciary may remain liable under state law for breach of a duty of loyalty.

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