In the last four years, the Federal Courts of Appeal and the Supreme Court have addressed the significant question of what constitutes a personal benefit in determining whether an insider has breached a fiduciary duty in insider trading tipping cases. After taking a circuitous route, it appeared for a time that the law ended up exactly where it started thirty-five years ago, with the Supreme Court decision, Dirks v. SEC. However, a subsequent pair of Second Circuit split decisions (in the same case!) have put the law on personal benefit back in play.

DIRKS FOR DECADES -

In Dirks, the Supreme Court held that the test for determining whether an insider has breached a fiduciary duty is “whether the insider personally will benefit, directly or indirectly, from his disclosure.”