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Chiarella v. United States (U.S. 1980)

This decision rejects the so-called “equal access theory” of insider trading, according to which anyone trading while in possession of material nonpublic information violates rule 10b-5.

1. According to the majority, why is the equal access theory inconsistent with rule 10b-5? In other words, what else is required for a 10b-5 violation, besides trading while in possession of material nonpublic information?
2. As Burger’s dissent points out, Chiarella did not simply trade while in possession of material nonpublic information: Chiarella misappropriated that information from his employer. Why is such misappropriation not sufficient to subject his trades to 10b-5 liability? Or is it? Cf. part IV of the majority opinion and O’Hagan, infra.
3. Do you think the equal access theory would be good policy? What interests would it protect, if any? What desirable activities might it hamper?