Diamond v. Oreamuno
New York Court of Appeals
248 N.E.2d 910 (N.Y. 1969)
Relevant factsFree
MAI's chairman and president (defendants) sold large amounts of company stock, using undisclosed knowledge that increased maintenance costs would soon reduce the company's earnings, just before that information became public and the stock price fell; Diamond (plaintiff), a shareholder, brought a derivative action seeking to compel an accounting for those insider-trading profits, and the defendants moved to dismiss, arguing no injury to the corporation was alleged and that federal securities law preempted the state-law claim.
IssueFree
Whether officers and directors may be compelled to account for profits realized from insider trading under state law, even without a showing of harm to the corporation.