Chiarella v. United States (1979)
- Docket
- 78-1202
- Decided
- 1979-01-01
Summary
Question: Did Chiarella violate Section 10(b) of the 1934 Act by failing to disclose the impending takeover before trading in the target company's securities? Conclusion: No. A duty to disclose information arises if there is a relationship of trust and confidence between parties to the transaction. Chiarella had no such duty. He was not a corporate insider in the acquiring corporation and he did not receive confidential information from the target company. He also had no fiduciary relationship with the shareholders of the target company: he was not their agent; they placed no trust or confidence in him; indeed, they had no prior dealings with him. A duty to disclose under Section 10(b) does not arise from the mere possession of nonpublic market information.