In the 1910 case of Sexton, as Trustee in Bankruptcy of Kessler & Company, v. Dreyfus, the U.S. Supreme Court dealt with a dispute over bankruptcy law and its application to stock transactions. The trustee for Kessler & Co., which had gone bankrupt, sued Dreyfus to recover payments made by Kessler for stocks purchased from him on grounds that these were preferential transfers voidable under bankruptcy law. However, Dreyfus argued that he was not an insider or creditor at the time of transaction and thus it could not be considered preferential transfer. The court ruled in favor of Dreyfus stating that while he did receive payment from a debtor who later declared bankruptcy within four months after such payment (a period specified by statute), this alone does not make it a fraudulent conveyance unless there is evidence showing intent to hinder or delay other creditors or if he received more than his due share compared to others in similar situation.

In the dissenting opinion for Sexton v. Dreyfus, it was argued that the majority's decision to allow a creditor to retain preferential payments made by an insolvent debtor within four months of bankruptcy filing contradicted established principles of equity and fairness in bankruptcy law. The dissent emphasized that such preferential payments undermine the fundamental goal of equitable distribution among creditors in bankruptcy proceedings. It was further contended that allowing such preferences incentivizes collusion between debtors and favored creditors at the expense of others, thereby undermining public confidence in the integrity and fairness of bankruptcy proceedings. The dissent also criticized the majority's interpretation of relevant statutory provisions as overly narrow and inconsistent with legislative intent.