This section contains the nature of the case and procedural background.

D is a printer by trade who worked as a 'markup man.' D handled were five announcements of corporate takeover bids. When these documents were delivered to the printer, the identities of the acquiring and target corporations were concealed by blank spaces or false names. The true names were sent to the printer on the night of the final printing. D was able to deduce the names of the target companies before the final printing from other information contained in the documents. Without disclosing his knowledge, D purchased stock in the target companies and sold the shares immediately after the takeover attempts were made public. D realized a gain of slightly more than $30,000 in the course of 14 months. The Securities and Exchange Commission (P) began an investigation of his trading activities. D entered into a consent decree with the Commission in which he agreed to return his profits to the sellers of the shares. D was discharged by his employer. D was indicted on 17 counts of violating § 10 (b) of the Securities Exchange Act of 1934 (1934 Act) and SEC Rule 10b-5. D was convicted on all counts. The Court of Appeals for the Second Circuit affirmed petitioner's conviction. The Supreme Court granted certiorari.

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