prohibition against insider trading under Rule 10b-5. The Supreme Court laid out the elements which established a violation of insider trading prohibition. First, there must be a relationship giving the insider access to information intended only for corporate purposes. Second, allowing the insider to take advantage of the information without disclosure must be unfair. The Court then noted that the duty of disclosure arises from the insider's fiduciary relationship with the corporation or seller of securities; it does not arise merely from the possession of nonpublic information.
When the government found itself stymied in its efforts to prosecute cases which were based solely upon access to material, nonpublic information, it turned to a "misappropriation" theory. This new theory looked upon information as a form of property, similar to state law theories which had regarded inside information as a corporate asset which could be "converted," "stolen," or "misappropriated" for personal gain. The Second Circuit adopted the misappr
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