01-1226 SEC v. Lipson

By: dmc-admin//January 14, 2002//

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“If the existence of an alternative legitimate purpose were a defense to a charge of insider trading, any insider who wanted to be able to engage in such trading with impunity would establish an estate plan that required him to trade in his company’s stock from time to time but gave him discretion as to when and how much to trade. He could then trade on the basis of inside information yet defend on the ground that he was also trading in implementation of his estate plan. He would be doing both. Yet even to regard the good and the bad purpose as alternatives is to sugarcoat the pill. In the case just put, the insider would be using inside information to implement his estate plan more effectively. He would be like someone who robbed a bank with the intention of giving the money to charity. The noble end would not immunize the ignoble means of achieving that end from legal punishment.”

Affirmed.

Appeal from the United States District Court for the Northern District of Illinois, Guzman, J., Posner, J.

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