In 2008, the SEC indicted Dallas Mavericks owner and media mogul Mark Cuban for insider trading based exclusively on information obtained while under an oral confidentiality agreement. The government argued that this agreement was sufficient to establish the necessary duty required under the misappropriation theory based on SEC Rule 10b5- 2(b)(1) passed in 2000. This Note argues that a confidentiality agreement is insufficient for establishing the requisite fiduciary or fiduciary-like relationship under the misappropriation theory. Further, this Note argues that the SEC’s attempt to circumvent the requirement for a fiduciary or fiduciary-like relationship by promulgating Rule 10b5-2(b)(1) overreaches the power given to the SEC under the Securities Exchange Act.
