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.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Morrison & Foerster LLP - Broker-Dealer Compliance + Regulation | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »