The Personal Benefit Test in Misappropriation Cases

March 13, 2012  |  Law Journal Newsletters Business Crimes Bulletin

Courts apply the personal benefit test in tipping cases brought under the "classical" theory of insider trading. Prosecutors and regulators argue that the test does not apply in misappropriation cases and some courts have agreed. But careful examination of the purpose for the test and the requirements of misappropriation liability suggests that the government's opposition is misguided.

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