Tipper Law and Legal Definition
A tipper is a person who has possession of material inside information of a corporation and who makes selective disclosure of such information for trading or other personal purposes. A tipper's breach will be found only when material, nonpublic information is transferred for the personal benefit of the tipper. The test applied to find breach is whether an insider personally will benefit, directly or indirectly, from his/her disclosure. In the absent of any personal gain, there is no breach of duty to stockholders by the tipper.
In Rothberg v. Rosenbloom, 808 F.2d 252 (3d Cir. 1986), the court observed that “A private action for damages by a tippee against a tipper may be barred on the grounds of the plaintiff's own culpability only where (1) as a direct result of his own actions, the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress, and (2) preclusion of suit would not significantly interfere with the effective enforcement of the securities laws and protection of the investing public.”
