This article commemorates the fiftieth anniversary of the Second Circuit’s Texas Gulf Sulphur decision by examining the impact of the case on insider trading law in the United States. The author begins by discussing the SEC’s opinion, In the Matter of Cady, Roberts & Co., which laid the foundation for the Texas Gulf Sulphur decision by creating a federal duty to disclose material nonpublic information or abstain from trading securities. The author then posits that the SEC, in its Cady, Roberts decision, rejected judicially developed common law fiduciary duty to disclose based on trust and confidence, and, by administrative fiat, substituted a broader federal duty of disclosure centered on access and unfairness. Next, the article examines how the Cady, Roberts decision would fair under the Supreme Court’s modern insider trading law. Finally, the article concludes with a discussion of the court’s adoption of a new federal duty of disclosure in Texas Gulf Sulphur.
Manning G. Warren III,
A Birthday Toast to Texas Gulf Sulphur,
SMU L. Rev.