Like tipper/tippee liability, there are limits to use of misappropriation theory. In Dorozhko, the Second Circuit extends misappropriation theory in a novel way. Dorozhko involves a Ukrainian hacker who steals inside information and then trades on it. The lack of a fiduciary relationship to the source of the information should mean there is no liability under misappropriation theory. However, here the court agrees with the SEC's theory and extends liability but in a novel way, suggesting that fiduciary relationships are not actually required in order to establish liability under 10b-5.
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