Tennessee
How Chiarella v. United States applies in Tennessee: state-specific rules, key cases, and bar exam notes for Securities Regulation.
Tennessee recognizes the principles outlined in Chiarella v. United States regarding insider trading, particularly the requirement for a fiduciary relationship. The state emphasizes the necessity of a duty to disclose material information for liability to attach under its securities regulations.
In Tennessee, liability for insider trading arises when an individual fails to disclose material information while having a fiduciary duty to the shareholders or when engaging in deceptive practices in connection with the purchase or sale of securities.
The court held that a CEO who traded on non-public information about a merger was liable for insider trading for breaching his duty of confidentiality.
This case reaffirmed that a duty to disclose exists when one stands in a fiduciary capacity to another regarding securities transactions.
The court ruled that a failure to disclose material non-public information, while having knowledge of it, constitutes securities fraud under Tennessee law.
Tennessee's approach largely aligns with the federal standard established in Chiarella, emphasizing the necessity of a fiduciary duty. However, Tennessee may apply broader interpretations regarding the duties owed to shareholders and the scope of material information than federal regulations.
Knowledge of Chiarella v. United States and its application in state law can appear in multiple-choice questions relating to securities regulations on the Tennessee bar exam.