<P> These are roughly comparable to the elements of common law fraud, which are i) Deception; ii) Materiality; iii) with Intent to Cause Reliance; that iv) causes Actual Reliance; and v) Harm . </P> <P> In a case for insider trading, anyone who uses insider information can be held liable . A tippee can be liable if the tipper breached a fiduciary duty and the tippee knew or had reason to know that the tipper was breaching the duty . </P> <P> Deceit can be in the form of an affirmative misrepresentation or of an omission of fact which, in context, makes other facts misleading . </P> <P> Furthermore, for a private party to recover damages, they must be able to show that they were injured because they relied on the fraudulent claim . Alternately, fraud can occur through omission of a material fact, where the injured party does not have to prove reliance, because it is assumed to have occurred . If the defendant had publicly made a fraudulent statement, every investor could sue if it could be shown that the statement affected the market as a whole . This is the "fraud on the market" theory the Supreme Court enunciated in Basic Inc. v. Levinson . This "fraud on the market" presumption of the plaintiff's reliance upon the deceit is only available in situations (like in Basic) where the security is traded on a well organized and presumably efficient market . The same can be said for an omission of material information . </P>

Sections 10(b) of the securities exchange act of 1934