BloombergView columnist Matt Levine had this to say ...

Nobody really likes how insider trading law works, so lots of people think they can do better. Here's an effort from Zachary Gubler of Arizona State, arguing "that we should replace the classical theory with the misappropriation theory of insider trading." The "classical theory" is that corporate executives owe a fiduciary duty to their shareholders, and so shouldn't trade with those shareholders while possessing material nonpublic information. But this doesn't apply to, for instance, a company's lawyers, so courts have developed the "misappropriation theory" to cover them.

Courts have historically applied the misappropriation theory only to cases of insider trading involving corporate outsiders, but there is no reason why it couldn’t also be applied to the classic case of insider trading. After all, when an insider trades in his own corporation’s stock based on material non-public information, he misappropriates that information in breach of a fiduciary relationship owed to the corporate entity.

The practical consequences of this don't seem enormous -- "the misappropriation theory would lead to liability for insider trading in debt securities," that sort of thing -- but he argues that it "would do a better job explaining what courts actually do in these cases." Essentially, when a corporate executive insider trades, we'd say that it's bad not because he violated his duties to shareholders by trading with them, but because he violated those duties by misappropriating their information. That does make more sense. For instance, it explains tipper liability -- cases where the insider doesn't trade, but gives information to a friend who trades and gives the insider a personal benefit -- a lot more clearly than the classical theory.

On the other hand, here is Michael Guttentag of Loyola Law School arguing that courts should get rid of the personal benefit test and "go back to the underlying statutory prohibition against deceptive conduct." This way, I think, madness lies. Remember, there is no actual law against insider trading. There is a law against using "any manipulative or deceptive device or contrivance" in trading stock, which has been interpreted to include insider trading. But insider trading is not obviously deceptive. The guy on the other side of the trade never meets you; you are not telling him lies about the company. You know something he doesn't -- but that's often true in trading. If diligent research on the company's earnings isn't a "deceptive device," why is calling up a corporate insider to ask about those earnings a "deceptive device"?

Meanwhile in actually existing insider trading law, Vladimir Eydelman -- whom you may remember as the guy who insider traded based on information written on Post-It notes or napkins that his tipper would then eat -- was sentenced to 3 years in prison. I suppose eating the napkin does sort of look like a "deceptive device."