United States v. O'Hagan
| United States v. O'Hagan | |
|---|---|
 F.3d 641 (8th Cir. 1998). | |
| Holding | |
| A person who trades in securities for personal profit, using confidential information misappropriated in breach of a fiduciary duty to the source of the information, may be held liable for violating § 10(b) and Rule 10b-5, and so the SEC did not exceed its authority under § 14(e) by adopting Rule 14e-3(a) without requiring a showing that such trading entailed a breach of fiduciary duty. | |
| Court membership | |
| |
| Case opinions | |
| Majority | Ginsburg, joined by Stevens, O'Connor, Kennedy, Souter, Breyer; Scalia (parts I, III, IV) |
| Concur/dissent | Scalia |
| Concur/dissent | Thomas, joined by Rehnquist |
| Laws applied | |
Rule 10b-5 | |
United States v. O'Hagan, 521 U.S. 642 (1997), was a
Justice Ruth Bader Ginsburg, the Court held that an individual may be found liable for violating Rule 10(b)-5 by misappropriating confidential information.[1] The Court also held that the Securities and Exchange Commission did not exceed its rulemaking authority when it adopted Rule 14e-3(a), "which proscribes trading on undisclosed information in the tender offer setting, even in the absence of a duty to disclose".[2]
Background
James O'Hagan was a partner at
Pillsbury Company, headquartered in Minneapolis.[2] Even though he was not directly involved in the transaction, O'Hagan learned about the possible takeover by overhearing a discussion at lunch. In August 1988, O'Hagan began purchasing stock and options of the Pillsbury company, at around $39 per share.[3]
By the end of September, O'Hagan owned approximately 5,000 shares of Pillsbury and 2,500 options – more than any other individual investor.[3] In October, Grand Met announced the takeover bid and the price of Pillsbury stock rose to $60 per share. O'Hagan subsequently sold his stock at a profit of more than $4.3 million.[4]
Opinion of the Court
The Court held that O'Hagan could be found liable under Rule 10(b) for misappropriating confidential information, and the court
Warren Burger in Chiarella v. United States.[6]
See also
- List of United States Supreme Court cases, volume 521
- List of United States Supreme Court cases
- Lists of United States Supreme Court cases by volume
- List of United States Supreme Court cases by the Rehnquist Court
References
External links
- Text of United States v. O'Hagan, 521 U.S. 642 (1997) is available from: Justia Library of Congress Oyez (oral argument audio)