What is the "misappropriation theory" of insider trading, and how does it relate to the regulation of insider trading?

The misappropriation theory of insider trading is a legal concept that expands the definition of insider trading beyond the traditional concept of trading based on material non-public information obtained from the company. The theory was first articulated by the US Supreme Court in the 1997 case of United States v. O'Hagan. Under the misappropriation theory, a person can be found guilty of insider trading even if they do not have a direct relationship with the company whose securities are traded. This can occur wh....