Question

The Supreme Court ruled on United States v. O'Hagan, a case on insider trading. In the case O'Hagan, a lawyer in a firm representing the target of a tender offer, traded in the stock of the company (using the insider information) for personal profit. The Court's ruled that this was a breach of a fiduciary duty to the source of the information, which is best characterized as:

a. ethical relativism —changes their rule according to the circumstance.


b. social contract—help investors to expect an even playing field.


c. utilitarian—helps maximize pleasure for the most people.


d. ethical egoist—maximizes self-interest.

Answer 1

The Supreme Court's decision in United States v. O'Hagan is best characterized as a breach of fiduciary duty and aligns with the social contract approach, aiming to ensure fairness and integrity in financial markets.

Step-by-step explanation:

In United States v. O'Hagan, the Supreme Court ruled that a lawyer who traded on insider information breached a fiduciary duty to the source of the information, which aligns with the concept often referred to as Insider Trading. This ruling emphasized the importance of upholding legal and ethical standards within financial markets by affirming that individuals with access to non-public information must not use it for personal gain. This upholds the integrity of the markets and aims to preserve a fair playing field for all investors.

The Court's decision can be best characterized as aligning with a social contract approach. By enforcing laws against insider trading, the Supreme Court helps maintain investor trust in the market, ensuring that no one has an unfair advantage through access to confidential information. This reflects a commitment to equal opportunity and the protection of market integrity, hence providing a foundation for a stable and fair financial environment where investors' interests are respected.