Law & Business Seminar: Misleading Silence as the Basis for Insider Trading...

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ASIC, Level 5, 100 Market Street

Sydney, NSW 2000

Australia

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Misleading Silence as the Basis for Insider Trading Liability under the U.S. Federal Securities Laws

Speaker: Professor Donna M. Nagy, Indiana University


Insider trading law in the United States is drawn mainly from a series of U.S. Supreme Court decisions construing a broad anti-fraud rule promulgated by the Securities and Exchange Commission (SEC), the watchdog agency created by the U.S. Congress to administer the federal securities laws. As such, the jurisprudence encompasses literally hundreds of lower federal court decisions over a fifty-year span, with each one struggling to determine whether a trader, or in some instances a "tipper," has engaged in deceptive conduct in connection with a securities transaction. With a view to the common law concept of misleading silence, the presentation contends that U.S. insider trading law would have been much more coherent, as well as far more effective in attaining Congress's and the SEC's policy goals, had the Supreme Court regarded the breach of a fiduciary disclosure duty as a sufficient condition -- rather than a necessary condition -- for insider trading liability under SEC Rule 10b-5. It further contends that while federal courts can still theoretically broaden their application of the common law in insider trading cases, tradition and the sheer passage of time makes the judiciary unwilling to do so. A new federal statute that would prohibit securities trading on the basis of "wrongfully obtained information" is therefore the best way forward.


About the speaker

Donna M. Nagy is the C. Ben Dutton Professor of Law at Indiana University Maurer School of Law in Bloomington, Indiana. She teaches and writes in the areas of securities litigation, securities regulation, and corporations, and recently served for six years as the law school's Executive Associate Dean. Her scholarship includes two co-authored books, one on the law of insider trading and a casebook on Securities Litigation and Enforcement. She has published extensively in distinguished law journals on matters including insider trading and fiduciary principles; government officials and financial conflicts of interest; and securities enforcement remedies. She is also a frequent speaker on securities regulation and litigation topics at law schools and professional conferences. Professor Nagy is a member of the American Law Institute and served as a member of the National Adjudicatory Council of the Financial Industry Regulatory Authority (FINRA) and as an appointed member to the ABA Corporate Laws Committee. She began her teaching career in 1994, and prior to that, was an associate with Debevoise & Plimpton in Washington, D.C. She earned her law degree in 1989 from New York University School of Law and her BA in Political Science in 1986 from Vassar College.

This paper, and Professor Nagy’s visit to Australia, forms part of Australian Research Council Discovery Project DP180100932, entitled ‘Developing a Rational Law of Misleading Conduct’ led by Professors Elise Bant and Jeannie Paterson of Melbourne Law School. The paper will be published with Hart Publishing in 2020, as part of a collection of essays entitled ‘Misleading Silence’. Please contact Professors Bant and Paterson for further information regarding this project.


Commentator: Associate Professor Juliette Overland, The University of Sydney Business School

Chair: Jason Harris, Professor of Corporate Law, Sydney Law School


Time: 5.30-6.45pm (registration and light refreshments from 5pm)

Registration: Free, but registration is essential.


CPD Points: 1


The Law & Business Seminar Series is sponsored by the Ross Parsons Centre for Commercial, Corporate and Taxation Law, Sydney Law School.

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ASIC, Level 5, 100 Market Street

Sydney, NSW 2000

Australia

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