Misappropriation Theory

Misappropriation Theory is a principle in securities law that focuses on the idea that individuals can be held liable for trading securities based on confidential, non-public information they have improperly obtained. Essentially, if someone uses insider information, which they acquired through a breach of duty (like an employee leaking company secrets), to profit from stock trading, they are misappropriating that information. This theory aims to protect the integrity of the financial markets by ensuring fair competition and preventing unjust advantages that can arise from secretive information.