Insider Securities Dealings During Corporate Crises

The problem of assuring the fidelity of corporate insiders to the public investors in their enterprises figured prominently in legal literature and law reform proposals twenty-five or thirty years ago. In recent years, that question has attracted relatively less attention-in part because of the appearance or recognition of more significant problems in the relationship of publicly-held corporate enterprise to the national well-being, but in part also because of the development by courts, legislatures and administrative agencies-and to some extent by the insiders’ community itself-of more exacting standards of loyalty. Recognition of broader obligations to their corporations and to public investors has meant redefinition of “improper” or “wrongful” conduct to include many kinds of behavior theretofore thought permissible, if not entirely proper. And it also has impelled the use of prophylactic rules to enforce those enlarged definitions; so that even though certain types of activity may not be wrongful or cause injury on every occasion when indulged in, they are nevertheless proscribed broadly, both for administrative reasons and in deference to the recurrent, if not uniformly held, notion that a corporate insider must be not only virtuous but above suspicion.