In the 1982 case Dirks v. Securities and Exchange Commission, the U.S. Supreme Court ruled in favor of Raymond Dirks, a financial analyst who had been censured by the SEC for insider trading violations. The court held that an individual cannot be held liable for securities fraud unless they have breached a fiduciary duty to shareholders by disclosing confidential information. In this case, Dirks was tipped off about fraudulent activities at Equity Funding Corporation of America (EFCA) and shared this information with his clients who subsequently sold their EFCA shares before news broke publicly causing stock prices to plummet. Despite being charged with aiding and abetting insider trading by the SEC, the Supreme Court found that since neither Dirks nor his source were insiders or owed any fiduciary duties to EFCA’s shareholders - there was no violation of securities laws.

The dissenting opinion in the case of Dirks v. Securities and Exchange Commission argued that the majority's decision undermined the purpose of securities laws, which is to ensure fairness in financial markets by preventing insider trading. The dissenters believed that anyone who intentionally disseminates nonpublic information for personal gain should be held liable under these laws, regardless of whether they are a corporate insider or not. They contended that this interpretation would better serve to deter fraudulent practices and maintain investor confidence in market integrity. Furthermore, they disagreed with the majority's view on tippees' liability, arguing it should not depend on whether an insider benefits from disclosing information but rather if such disclosure constitutes a breach of duty towards shareholders.