The U.S. District Court for the Southern District of New York has thrown out the SEC’s insider trading case against three individuals, the “tipper,” the “tippee” and the tippee’s superior, who allegedly traded in the securities of SunSource, Inc. (SunSource) after receiving inside information about the potential sale of SunSource.  In early 2001, Allied Capital Corporation (Allied) began exploring the possibility of acquiring SunSource and spinning off one of SunSource’s subsidiaries.  GE Capital was one of several lenders that were approached about the possibility of financing the transaction.  Defendant Thomas Strickland worked for the commercial finance group of GE Capital and was assigned to the SunSource deal team.  Strickland noticed that hedge fund Wynnefield Capital, Inc. (Wynnefield) owned SunSource stock.  In May 2001, Strickland had a conversation about SunSource with defendant Peter Black, an analyst at Wynnefield who happened to have been a college classmate of his.  Black advised his boss, defendant Nelson Obus, of Strickland’s interest in SunSource.  Obus then purchased additional shares of SunSource stock.  After Allied merged with SunSource, the Securities and Exchange Commission (SEC) brought civil insider trading charges against Strickland, Black and Obus.  On the defendants’ motion for summary judgment, the District Court dismissed the case against them.  It reasoned that, in mentioning the SunSource financing to Black, Strickland had not violated any fiduciary duty to GE Capital or SunSource, had not breached any duty of confidentiality to either company and had not acted deceptively.  Therefore, Strickland’s tip did not give rise to liability.  We outline the facts of the case and the Court’s reasoning.