A federal court of appeals held out the possibility that insider trading prohibitions – at least under the classic theory – do not apply to mutual fund redemptions.
The U.S. Court of Appeals for the Seventh Circuit recently reversed and remanded a summary judgment granted to the Securities and Exchange Commission (SEC) in a case alleging that a mutual fund’s chief compliance officer (CCO) improperly redeemed fund shares while in possession of material non-public information. The court directed the district court to address the novel issue of whether Section 10(b) of the Securities Exchange Act of 1934 applies to insider trading in mutual fund shares.
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Topics: Chief Compliance Officers, Insider Trading, Mutual Funds, Right of Redemption, SEC, Securities Exchange Act, Summary Judgment
Published In: Business Torts Updates, Civil Procedure Updates, General Business Updates, Finance & Banking Updates, Securities Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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