Insider trading is typically prosecuted under § 10b and Rule 10b-5.  

I. Traditional Theory of Insider Trading

Suppose a corporation’s board of directors decided to reduce the corporation’s quarterly dividend. Anticipating that the stock price would drop once the news came out, one of the directors sold off a block of the shares she owned in the corporation before the decision became public. This conduct represents insider trading under the traditional theory. See In re...