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Quotation from United States v. O'Hagan by Supreme Court of the United States
“Because the deception essential to the misappropriation theory involves feigning fidelity to the source of information, if the fiduciary discloses to the source that he plans to trade on the nonpublic information, there is no "deceptive device'' and thus no §10(b) violation-although the fiduciary-turned-trader may remain liable under state law for breach of a duty of loyalty.”
United States v. O'Hagan, Opinion of the Court (Justice Ginsburg), Part II-B (U.S. Reports text (Legal Information Institute))
Justice Ginsburg explains why full disclosure to the source removes Section 10(b) liability.
Citation: "Because the deception essential to the misappropriation theory involves feigning fidelity to the source of information, if the fiduciary discloses to the source that he plans to trade on the nonpublic information, there is no "deceptive device'' and thus no §10(b) violation-although the fiduciary-turned-trader may remain liable under state law for breach of a duty of loyalty." — Supreme Court of the United States, United States v. O'Hagan, Opinion of the Court (Justice Ginsburg), Part II-B (U.S. Reports text (Legal Information Institute)). (id united-states-v-ohagan-q2)
Portrait: Ruth Bader Ginsburg official SCOTUS portrait (cropped), Steve Petteway, Collection of the Supreme Court of the United States, Public domain.
