Ronald Secrist, a former officer of Equity Funding of America (Equity Funding), told Raymond Dirks (defendant) that Equity Funding’s assets were exaggerated due to fraudulent corporate practices. Secrist told Dirks to verify the fraud and publicly disclose it. Dirks investigated Equity Funding and over the course of his investigation, he discussed his findings with various investors, including some investors who had stock in Equity Funding and who sold the stock after they spoke with Dirks. As a result of the stock sales, Equity Funding’s stock fell abruptly and the SEC opened an investigation. The SEC found that Dirks aided and abetted insider trading in violation of SEC Rule 10b-5. The court of appeals affirmed. Dirks appealed.