In other words, does state law impose duties resembling Reg FD? ASt the outset, one should note that Reg FD was necessary precisely because a director or officer's fiduciary duties did not prohibit him from selectively disclosing information when doing so for a corporate purpose. Put another way, Reg FD was necessary because the SEC wanted to go far beyond cases in which a director or officer could be liable for tipping.
It has long been Delaware law that:
The directors of a Delaware corporation are required to disclose fully and fairly all material information within the board's control when it seeks shareholder action. When the directors disseminate information to stockholders when no stockholder action is sought, the fiduciary duties of care, loyalty and good faith apply.
Malone v. Brincat, 722 A.2d 5, 12 (Del. 1998).
I take it that the question is whether a Reg FD-type disclosure obligation arises under those state law duties of loyalty and good faith. I am not aware of any law directly on point.
Donna Nagy has argued that “insiders who deliberately leak information in violation of Regulation FD have failed to act in good faith and thereby breach their duty of loyalty ‘by causing the corporation to violate the positive laws that it is obligated to obey.’” Donna M. Nagy, Salman v. United States: Insider Trading's Tipping Point?, 69 Stan. L. Rev. Online 28, 33–34 (2016). But even if true, of course, this does not mean there is an free standing state law equivalent of Reg FD.
Interestingly, although not directly on point, a letter ruling by VC Noble stated that:
A director may not harm the corporation by, for example, interfering with crucial financing efforts …. Moreover, he may not use confidential information, especially information gleaned because of his board membership, to aid a third party which has a position necessarily adverse to that of the corporation.
That is what Michael did.
… [T]he disclosure of confidential information to a potential investor (an adverse party at that particular moment), especially when the director knows (and hopes) that the disclosure would benefit the potential investor to the substantial detriment of the Company, is conduct which, in and of itself, is a breach of the duty of loyalty.
Shocking Techs., Inc. v. Michael, No. CIV.A. 7164-VCN, 2012 WL 4482838, at *9-10 (Del. Ch. Oct. 1, 2012), vacated, (Del. Ch. 2015). This is, I suppose, sort of the inverse of the Reg FD question.
