M. Anne Kaufold

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In a case of first impression, SEC v. Yun, the United States Court of Appeals for the Eleventh Circuit settled two disputed aspects of insider-trading liability. First, a duty of loyalty and confidentiality between spouses may be shown if the spouses have a history or practice of sharing and maintaining business confidences or, if in disclosing the confidential information, the spouse breaches an agreement to maintain the other spouse's business confidences. Second, in a misappropriation theory of insider-trading liability action, the Securities and Exchange Commission ("SEC") must prove that the misappropriator expected to benefit from the tip. The decision in Yun creates a split with the Second Circuit Court of Appeals by more broadly defining the spousal duty of loyalty and confidentiality. Furthermore, the court increased the commonality between the classical theory and the misappropriation theory of insider-trading liability by holding that the SEC must prove that the misappropriating outsider or "tipper" had an intent to benefit from the tip.