Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Insider trading restrictions under Rule 10b-5 under the Securities Exchange Act of 1934, as amended, prohibit (under certain circumstances) trading transactions and tipping by those enjoying a relationship of trust and confidence with an issuer, its stockholders, or others. As such, U.S. insider trading regulation under Rule 10b-5 is inextricably intertwined with agency law principles, with one scholar noting: "Agency law provides a . . . comprehensive and coherent basis for dealing with the problem of insider trading, which is, at bottom, the misuse by faithless agents of information that belongs to others." A.C. Pritchard, United States v. O'Hagan: Agency Law and Justice Powell's Legacy for the Law of Insider Trading, 78 B.U.L. Rev. 13, 17 (1998).

Yet agency law does not perfectly sync with, or fully explain, insider trading regulation under Rule 10b-5. Moreover, it does not well explain the law governing insider trading in other countries. Different rationales may better explain the applicable law in other jurisdictions.

This article explores the relationship between agency law and insider trading prohibitions in the United States and in various other countries and draws conclusions about the development of the law of insider trading in those jurisdictions based on the extent and nature of that relationship.