Insider Trading

Rule 10b-5 also forbids almost every security trading based on inside information (important to a reasonable investor and not public).

Insiders (directors, officers, controlling shareholders, employees of the issuer, and the issuers´ accountants, attorneys and bankers), tippers, if the tip was made for an improper purpose and tippees, if they knew the tipper was breaching its duty may be liable under rule 10b-5, providing there was a breach in a duty of trust and confidence owed to the issuer and to the shareholders of the issuer.

Misappropriators are held responsible, under rule 10b-5, because of a breach of duty of trust and confidence owed to the source of the information.