5) Insider trading: 10b-5 Flashcards
10b-5
misrepresentations re securities
securities: def
investor is investing $ in common enterprise w expectation of profits. Dnn to be publicly traded for 10b-5.
10b-5: jurisdictional threshhold reqs
1) interstate commerce or instrumentality AND
2) bought or sold a security
10b-5: elements
1) untrue/misleading st or omission
2) material
3) scienter
4) reliance
5) causation
6) damages
10b-5: untrue/misleading st or omission:
any false / misleading st
omission counts if:
1) the omission makes a st false or misleading, OR
2) party has a duty to disclose
10b-5: materiality
reasonable investor would likely consider it important in deciding whether to buy or sell
consider: Basic test
10b-5: materialty: basic test
1) probability (likelihood)
2) magnitude (importance)
(high mag/low prob: hard to say)
10b-5: scienter
intent to deceive, manipulate, or defraud (neg not enough)
10b-5: reliance
P bringing claim under 10b-5 must show that he ACTUALLY RELIED
omissions: reliance presumed
10b-5: reliance: fraud on the market rule
*not in CA
courts will let you show reliance just based on integrity of the market
10b-5: causation
misstatement or omission must have caused the loss (not other factors)
10b-5: remedies
1) out of pocket expenses
2) restitution/disgorgement
3) rescission
4) benefit of the bargain
10b-5: remedies: oop expenses
difference btwn price paid and price should have paid
10b-5: remedies: restitution / disgorgement
someone made profits, now have to turn them over to me
10b-5: remedies: rescission
bought stock under false pretenses, now want the $ or stock back
