Colin Manchester is a J.D. Candidate at Washington and Lee and a former Summer Associate at Levene Gouldin and Thompson. He has experience in the defense and aerospace industry. He plans to work at Simpson Thatcher and Barlett in New York City next summer. In this episode of Classroom Insiders, Colin discusses how Justice Powell’s background translated into his understanding of the law and how this affected Dirks v. SEC.



It was Powell’s opinion that an individual should only be duty-bound to disclose information if there exists a relationship of trust and confidence between the parties, which is now recognized as a fiduciary duty. Therefore, if there is no fiduciary duty, there is no duty to disclose, which means you can’t be in violation of the disclose or abstain rule if you trade the information. His background as a corporate attorney helped him understand that equal access to the fair market was impossible, which influenced his opposition of the hard and fast disclose or abstain rule.


Dirks was an officer of a New York investment advisory firm who attempted to whistleblow on Equity Funding Corporation of America after receiving information about their fraudulent bookkeeping. He tried disclosing the information to the SEC and a Wall Street Journal publication. He then informed his clients, who sold their stocks before the information went public. The SEC saw this as Dirks attempting to get out early and avoid a huge loss, but Justice Powell argued that since Dirks received no pecuniary gain or reputational benefit, he could not be found liable.



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Colin Manchester on LinkedIn