FOR IMMEDIATE RELEASE                                       97-51




HIGH COURT UPHOLDS
"MISAPPROPRIATION" THEORY OF INSIDER TRADING


"INSIDER TRADING IS CHEATING AND WILL BE VIGOROUSLY
PROSECUTED," SAYS CHAIRMAN ARTHUR LEVITT


     Washington, D.C., June 25, 1997 -- The Supreme Court today handed down its
decision in United States v. O'Hagan, a criminal insider trading case.  O'Hagan was a
lawyer who was convicted for trading while in possession of confidential information that his
firm's client was planning to launch a tender offer for another company.  The conviction was
based on three theories.  The Court affirmed O'Hagan's convictions on all three of those
theories:  mail fraud; insider trading in violation of SEC Rule 14e-3, which applies to tender
offers; and for insider trading under the "misappropriation" theory based on SEC Rule 
10b-5.

     "This decision reaffirms the SEC's efforts to make the stock market fair to all people,
whether you're a Wall Street veteran or Main Street newcomer," said Arthur Levitt,
chairman of the Securities and Exchange Commission.  "Insider trading is profoundly
inconsistent with the American public's sense of fairness.  This decision is a reminder to all
investors that insider trading is cheating and will be vigorously prosecuted," said Levitt.

     The Commission is pleased that the Supreme Court has recognized the validity of all
three of these important weapons in the fight against insider trading.  The Court's decision
recognizes the importance of the efforts of both the SEC and the Justice Department in
protecting the integrity of the securities markets from the crime of insider trading.  The
Commission commends the Justice Department's Office of the Solicitor General for its
superb advocacy in this important case.  The SEC will continue to work closely with the
Justice Department to combat insider trading so that investors can depend on the fairness of
our nation's securities markets.