Mr. Rottenberg and Mr. Cooper are both in violation of Section 10(b) of the Securities of Exchange Act of 1934. Justice Ginsburg in United States v. O’Hagan, 521 U.S. 657 (1993) explained the misappropriation theory (Jennings, 2013). Simply stated, a person commits fraud if he/she knows confidential information concerning a security transaction and then uses that information to make a profit. Mr. Cooper knew about undisclosed information and then shared the information with Mr. Rottenberg and devised a scheme to make a profit. Mr. Rottenberg then violated Section 10(b) by sharing the information with his broker. If the broker uses the information to make a profit for himself/herself or fails to report the actions of Mr. Rottenberg, then
