United States v. OHagan - Essay Example

Running head: business United s v O’Hagan The holding in United s v O’Hagan has certainly brought about a new and unidentified perspective. The actions taken by O’Hagan after obtaining information about the acquisition and in order to take advantage of the information is morally and ethically incorrect and has an obligation to the shareholders. Also, because O’Hagan was someway associated with the law firm that was involved in the takeover process, even he is considered almost like an insider that acquired non-public information.

He tried to take advantage of this non-public information, which is ethically and morally incorrect. His actions would directly impact the shareholders and other stakeholders in the company in a big way.In the present case, O’Hagan has used the non-public information to his advantage to make huge profits, which consequently caused serious losses to other shareholders. Although the way O’Hagan obtained this information is very nonrepresentational and abstract, his association with the law firm, and in the process of takeover makes his case strongly liable to the shareholders under the §10(b).

The §10(b) in reality prohibits any act or accomplishment that results in fraud or deceit related to purchase or sale of any security. In the present case, O’Hagan has involved in an act which is fraudulent and deceitful from other stakeholders of the company.The excerpts from Justice Ginsberg’s decision state, “Under the “traditional” or “classical theory” of insider trading liability, §10(b and Rule 10b-5 are violated when a corporate insider trades in the securities of his corporation on the basis of material, non-public information.

The classical theory applies not only to officers, directors, and other permanent insiders of a corporation, but also to attorneys, accountants, consultants, and others who temporarily become fiduciaries of a corporation.” Even the law of misappropriation holds that misappropriating confidential information for securities trading purpose would be a breach of duty owed to the source of that information, which gives rise to a duty to disclose or abstain. O’Hagan’s case is a clear deception of conduct related to securities transactions.

The §10(b) holds that any action taken by anyone associated with the principal in any manner and/or had access to non-public information that would be used to their advantage is liable to the shareholders. O’Hagan although was not an insider, in sense, he had the information about the takeover, and his association with Dorsey & Whitney that was helping in the takeover process, makes him liable to the shareholders. Hence, actions taken by O’Hagan should be limited and hence covered by §10(b).