Seminar in Corporate Law

Insider trading cases, which are typically prosecuted as federal securities fraud, carry a mystique rarely present in other areas of corporate law. As a former U.S. Attorney for the Southern District of New York once observed, the cases involve basically cops and robbers. . . .[d]id you get the information and did you trade on it? Yet, while it is impossible to ignore the intrigue, it is also important to recognize that the federal prohibition of insider trading raises difficult issues of law and policy. Investigations and prosecutions by the Securities and Exchange Commission and Department of Justice for other civil or criminal offenses involving securities trading, such as market manipulation, involve issues that are similarly complex.

This seminar will first examine common law limitations on securities trading by corporate insiders, and then turn to the development by the U.S. Supreme Court and lower courts as to what, under federal antifraud laws, constitutes unlawful securities trading and tipping based on material nonpublic information, and illegal market manipulation. The course will then delve into the policy debates surrounding the regulation of insider trading and market manipulation, and will explore legislative reforms pending in Congress. Attention will also be given to recent scandals, including those involving insider trading allegations against government officials, the trading frenzy in GameStop s stock, and the strategic use by corporate executives of Rule 10b5-1 trading plans. Grading will be based on a seminar paper, an oral presentation to the class, and weekly participation.

Pre-requisite or co-requisite: Corporations, or special permission by the instructor.