Traders With Inside Information on the Impersonal Market Are Not Liable to Those Persons Trading After the Insider Has Ceased Trading but Before Public Disclosure



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Texas Tech Law Review


Examines Sixth Circuit case, Fridrich v. Bradford. This case involves insider trading allegations and claims of loss by the Fridrich claimants who were not included in either of the two classes of claimants entitled to file claims under Bradford’s stipulation settlement. The district court rendered judgment in favor of the plaintiffs and awarded them $361,186.75 in damages. The court of appeals reversed the lower court's judgment and found for the defendants. In the opinion of the appellate court, "the defendants' act of trading with third persons was not causally connected with any claimed loss by plaintiffs who traded on the impersonal market and who were otherwise unaffected by the wrongful acts of the insider. The court of appeals stated the question in Fridrich v. Bradford to be "how far the courts are to extend the private civil right of action under Section 10(b) and Rule 10b-5 when the alleged violation is the unlawful use of insider information and the stock involved is traded upon an impersonal market.



Securities, Rule 10b-5, Insider information, Impersonal market, Insider trading, Disclose or abstain rule, Causation in fact doctrine, Fridrich v. Bradford, Case note


8 Tex. Tech L. Rev. 742