insider

With respect to federal regulation of purchase and sale of securities, refers to anyone who has knowledge of facts not available to the general public (e.g., officers, directors, key employees, relatives). 15 U.S. C.A. No. 78p(a). An insider is liable for insider stock trading under section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 only where he or she fails to disclose material non-public information before trading on it and thus makes secret profits. Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911. In determining whether a person, not a director or officer, is a corporate "insider" who as a purchaser of stock has a duty to disclose material facts unknown to seller, the test is whether he had such a relationship to corporation that he had access to information which should be used only for corporate purposes and not for personal benefit of anyone. Ross v. Licht, D.C.N.Y., 263 F.Supp. 395, 409.

See also insider information

- insider reports

- insider trading; Rule 10b-5; short swing profits; tippees.

For purposes of Bankruptcy Code, "insider" is entity or person with sufficiently close relationship with debtor that his conduct is made subject to closer scrutiny than those dealing at arm's length with debtor. In re AcmeDunham Inc., D.C.Me., 50 B.R. 734, 739; Bankruptcy Code No. 101

@ insider information

Information about a company's financial situation that is obtained by insiders (officers, directors, employees, etc.), before the public obtains it. True inside information is usually only known by corporate officials or other "insiders." SEC rules and court decisions restrict stock trading by insiders on the basis of such information.

See also insider

- insider trading

- tippees

@ insider reports

Monthly reports required by Securities and Exchange Commission from directors, officers and stockholders of their transactions in stock of which they own more than 10% of such shares. 15 U.S.C.A. No. 78p(a)

@ insider trading

Term refers to transactions in shares of publicly held corporations by persons with inside or advance information on' which the trading is based. Usually the trader himself is an insider with an employment or other relation of trust and confidence with the corporation. Such transactions must be reported monthly to Securities and Exchange Commission (see insider reports).

The Supreme Court has established rules governing liability for insider trading under section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Two elements for establishing a violation of section 10(b) and Rule 10b-5 by corporate insiders are the existence of a relationship affording access to inside information intended to be available only for a corporate purpose, and the unfairness of allowing a corporate insider to take advantage of that information by trading without disclosure. Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348; Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911.

See insider

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