Hastings Business Law Journal


In the past ten years, the principal events in the law concerning insider trading have been the Supreme Court's adoption of the fraud on the source misappropriation theory in O'Hagan and the Commission's promulgation of Rules 10b5-1 and 10b5-2. While this article provides a solid grounding in the O'Hagan decision and the case law informing it, its commentary addresses the role that Rule 10b5-2, speaking to relationships giving rise to duties of trust or confidence, together with O 'Hagan, has had on recent securities litigation. Asking whether this post O'Hagan rulemaking and case law indicates a policy directive from the Commission to focus on the most volatile sectors of trading in the market, the article concludes that, in fact, the Commission has not effected any concentration on hedging or deal making at the leading edge of the market, but has instead continued a traditional (pre-O'Hagan and pre-Rule 10b5-2), broad market approach resulting in more decisions involving professional, family and employment relationships and the fact based duties of trust or confidence that may arise from them.