Dee, an accountant, does not work for Emergent Company, but wrong-fully obtains inside information concerning Emergent. Based on the information, Dee buys and sells Emergent stock for personal gain. The Securities and Exchange Commission prosecutes Dee, arguing that she is liable because she stole in-formation right-fully belonging to another. This argument is?

Misappropriation theory refers to a person who had access to non public trading Information and utilizes that trading information without a fiduciary right and as a result of using that information that person is said to have committed fraud towards the source of that information.

.Misappropriation theory is different when compared to the classical theory of insider trading , under the classical theory a person who is an outsider in the trading company learns of the information and uses it to trade the person has not commited fraud eventhough he learned it in a non public source.

Under misappropriation theory this is different an outsider can not trade using the non public information that they happened to have access to because they owe a fiduciary duty to a source of that information.

Misappropriation theory has the purpose to secure market from outside individuals who may have their hands on the confidential inside information but who has no fiduciary right in that corporation.