I debated this post about a Fox News article Insider Trading: Pillow Talk Reveals Couples’ Dirty Little Secrets.After all, what readers I have do not come here for SEC matters. This paragraph changed my mind:
The second theory, “misappropriation,” applies to someone who is not a corporate insider, but rather someone who owes a fiduciary duty to the source of the material non-public information for some reason. Misappropriating confidential information for securities trading purposes, in breach of a duty owed to the source of that information, gives rise to a duty to either disclose or abstain. In plain English, the outsider (aka the misappropriator) who has no ties to the corporation can be liable for insider trading if they fail to abstain from using the information or disclose the secret to the public. It’s under this theory that courts construe a duty of trust and confidence when the communicator of the information was a spouse, sibling, parent or child of the recipient, unless the recipient can show there was no reasonable expectation of confidentiality. So, you can be on the hook and have no direct connection to the corporation.