Facts
Chiarella worked as a financial printer. Chiarella handled five announcements of corporate take-over bids. When they were given to Chiarella, the corporate information was removed by Chiarella was able to discern based on certain details. Chiarella purchased stock and sold as soon as takeovers were announced.
Procedural History
Chiarella was convicted on all counts of securities fraud and the Court of Appeals affirmed.
Issue(s)
Did the lower courts err in finding Chiarella guilty?
Holding(s)
Yes.
Reasoning/Analysis
The Court found that Chairella was convicted of being a corporate insider although he was not a corporate insider. In effect, the trial court instructed the jury Chiarella owed a duty to everyone. Chiarella was in fact a stranger who dealt with sellers only through impersonal transactions. A duty to disclose does not arise from the mere possession of nonpublic information.
Judgment/Outcome
The Court reversed and remanded the judgment of the lower courts.
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