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Chiarella v. United States

United States Supreme Court
445 U.S. 222 (1980)



Chiarella (defendant) was an employee for a printing company that handled documents concerning corporate takeovers. The companies to be acquired were redacted until the final draft of the takeover agreements. In one instance, Chiarella was able to discover the companies involved in a takeover bid through the information provided in the draft takeover agreement. He then traded on this information, which was not public, and enjoyed earnings of $30,000. When it was discovered he was trading on nonpublic information, the United States (plaintiff) brought charges against him for violation of § 10(b) of the Securities Exchange Act of 1934, prohibiting fraud in the purchase or sale of securities, based on Chiarella's nondisclosure of information. At trial, Chiarella testified that the information he used in the stock trading was confidential, and that he obtained the information by deciphering the documents that the companies had provided to his employer. The trial court instructed the jury, among other things, that the jury must decide whether Chiarella used material nonpublic information to which he knew other people in the securities-trading market did not have access. A jury convicted Chiarella of insider trading, and the court of appeals affirmed Chiarella’s conviction. The United States Supreme Court granted Chiarella's petition for certiorari.

Rule of Law


Holding and Reasoning (Powell, J.)

Concurrence (Brennan, J.)

Concurrence (Stevens, J.)

Dissent (Blackmun, J.)

Dissent (Burger, C.J.)

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