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Second Circuit Holds that Personal Benefit is Not Required for Insider Trading

Feb 7, 2020

Insider trading, or “securities fraud,” is prohibited by 18 U.S.C. § 1348 and 15 U.S.C. § 10(b) As the Supreme Court explained in Dirks v. SEC, someone engages in insider trading under §10(b) if they breach a fiduciary duty by disclosing material, nonpublic information in exchange for a personal benefit. However, the Second Circuit’s recent holding in United States v. Blaszczak rejected this personal benefit requirement, at least as it relates to § 1348. The result? The range of conduct that triggers criminal liability under § 1348 is far bigger than the range of conduct that triggers liability under § 10(b). Stated another way, Blaszczak makes it easier for federal prosecutors to go after Title 18 securities fraud because – unlike Title 15 securities fraud – they do no need to prove the existence of a personal benefit.

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