Five prominent professors from Yale, Harvard, UCLA, Chicago and SMU have filed an amicus brief on Mark Cuban’s behalf in his insider trading case.
In the amicus brief, filed Monday according to the WSJ Law Blog, the professors — Alan Bromberg, Allen Ferrell, Jonathan Macey, Todd Henderson and Stephen Bainbridge — argue that “In the context of a business relationship, a confidentiality agreement alone is insufficient to create a fiduciary or similar relationship of trust and confidence between the parties. . . . a confidentiality agreement alone creates only an obligation to maintain the secrecy of the information, not a fiduciary or fiduciary-like duty to act loyally to the source . . . ”
They argue that a rule adopted by the SEC to address when “a breach of a family or other non-business relationship may give rise to liability under the misappropriation theory of insider trading” is inapplicable and contradicts Supreme Court precedent by creating liability without a fiduciary or similar relationship of trust and confidence.
