Elkind v. Liggett & Myers, Inc.
United States Court of Appeals for the Second Circuit
635 F.2d 156 (1980)
Uninformed investors (plaintiffs) purchased Liggett (defendant) stock during the window between Liggett's tip of material nonpublic information to financial analysts and the information's eventual public disclosure, and the district court calculated their damages using the ordinary securities-fraud measure -- the difference between their purchase price and the post-disclosure market price -- rather than limiting recovery to the tippees' actual trading gains.
Whether, in an insider-trading action, if a reasonable investor would either have delayed his purchase of stock or not purchased at all if he had the benefit of tipped insider information, an uninformed purchaser may recover any post-purchase decline in the market value of his shares.