insider trading :: essays research papers

Preliminary Note to Rule 10b5-1 This provision defines when a purchase or deal constitutes trading "on the undercoat of" material nonpublic information in insider trading cases brought under Section 10(b) of the Act and Rule 10b-5 thereunder. The law of insider trading is separate than defined by judicial opinions construing Rule 10b-5, and Rule 10b5-1 does not modify the scope of insider trading law in any other respect. a.     General. The "manipulative and jerry-built devices" prohibited by Section 10(b) of the Act and Rule 10b-5 thereunder include, among other things, the purchase or sales event of a surety of any issuer, on the basis of material nonpublic information about that security or issuer, in breach of a duty of trust or confidence that is owed directly, indirectly, or derivatively, to the issuer of that security or the shareholders of that issuer, or to any other soulfulness who is the source of the material nonpublic informat ion.b.     Definition of "on the basis of." Subject to the affirmative defenses in dissever (c) of this section, a purchase or sale of a security of an issuer is "on the basis of" material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale.c.     Affirmative defenses.1.     i.     Subject to separate (c)(1)(ii) of this section, a persons purchase or sale is not "on the basis of" material nonpublic information if the person making the purchase or sale demonstrates thatA.     Before becoming aware of the information, the person had1.     Entered into a binding contract to purchase or cuckold the security,2.     Instructed another person to purchase or sell the security for the instructing p ersons account, or3.     Adopted a written plan for trading securitiesB.     The contract, instruction, or plan described in paragraph (c)(1)(i)(A) of this Section1.     Specified the heart of securities to be purchased or sold and the price at which and the date on which the securities were to be purchased or sold2.     Included a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities were to be purchased or sold or3.     Did not permit the person to exercise any subsequent influence over how, when, or whether to effect purchases or sales provided, in addition, that any other person who, pursuant to the contract, instruction, or plan, did exercise such influence must not have been aware of the material nonpublic information when doing so and