University of Miami Law Review


SEC Rule 10b-5 covers a great deal of stock market insider trading and tipping, but certainly not all. For insider trading defendants, some elements of criminal liability may be different and possibly easier to satisfy under mail/wire fraud than under SEC Rule 10b-5 (e.g., materiality, and the requirements for tipper and tippee liability recently tightened for Rule 10b-5 by the Second Circuit). Generally, courts have not addressed these possible differences.

With insider trading and tipping, the victim of mail/wire fraud could be either the information-owner or the party on the other side of the transaction. The courts have not examined the latter victim and the possibility that such mail/wire fraud liability might be broader than under the Rule 10b-5 “classical relationship.” Another unexplored question is whether an employee of a company engaging in an insider trade of its stock could be criminally liable under two different mail/wire fraud theories with two separate mail/wire fraud victims: the company/information-owner and the party on the other side of the transaction.