Can a majority shareholder of a company with inside information take advantage of minority shareholders by purchasing their shares at the same price?

Speed v. Transamerica Corp., supra, presented a typical case of the majority stockholder having inside information

[407 F.2d 477]

taking advantage of minority stockholders by purchasing their stock without revealing information which would definitely have affected their judgment as to selling at the offered price.

[407 F.2d 477]

The improper use of inside information is illustrated in SEC v. Capital Gains Bureau, 375 U.S. 180, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963). The publisher knew that the recommendations of his financial service were likely to cause at least a temporary increase in the price of stocks favored. Therefore, to buy these stocks for his own account to reap the benefit of such increase was a violation of section 10b-5.