521 U.S. 642 (1997)
Respondent was a partner in a law firm which represented a company regarding a potential tender offer for the common stock of another company. During the representation, respondent purchased call options for the other company's stock and sold them for a significant profit. After the Securities Exchange Commission initiated an investigation into respondent's transactions, a jury convicted respondent of securities fraud.
- On writ of certiorari, the Court held that criminal liability under § 10(b) of the Securities Exchange Act of 1934 (15 U.S.C.S. § 78j(b)) may be predicated on the misappropriation theory.
- The court also held that Securities Exchange Commission Rule 14e-3(a) was the proper exercise of the Commission's prophylactic powers under § 14e of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78n(e), regarding the prevention of the misappropriation charged against respondent.
The Court reversed the judgment of the court of appeals holding that criminal liability under the Securities Exchange Act of 1934 may be predicated on the misappropriation theory.
Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials