provisions of the Act and the prohibition on trading on
material non-public information. As the Panel said, a higher
standard of vigilance and inquiry must be expected from
(d) The information that Miller received from L.K. was detailed
and very specific. L.K. told Miller that the takeover was for
$40, in cash, and by Christmas.
(e) Miller clearly considered this information to be reliable as is
evidenced by his e-mail to D.W., where he specifically refers
to the information as a “tip”.
(f) Within a very short time of receiving the information, Miller
bought, for himself, a significant number of shares of
Masonite. Miller also bought Masonite shares for his family
and for 22 clients.
(g) Miller did not conduct any research into Masonite before
making these purchases.
(h) Miller was sufficiently comfortable with the reliability of the
information that he passed it along to his colleague, Cheng,
who also purchased Masonite shares.
 That constellation of facts is sufficient to reach a conclusion that Miller ought reasonably to have known that the material non-public information that Miller received from L.K.
originated from an insider. As the Panel concluded, at para. 204:
From these established facts, we conclude that Miller ought to have known
that the MNPI [material non-public information] LK gave him derived from
a knowledgeable person. The relationship between the tipper and tippee,
the essential details of the MHM [Masonite] takeover bid, the precipitous,
anomalous, significant trading by Miller, the registrant, make it more probable than not that he ought reasonably to have known that LK was in a special relationship with MHM and the MHM Material Facts originated from a
person in a special relationship.
 That is a reasonable conclusion for the Panel to have
drawn from the available facts. It is also consistent with the
approach taken in the United States where courts have held
that knowledge that the likely source of the information is an
insider can be inferred from the nature of the information itself.
As the United States District Court for the Southern District of
New York said [in] S.E.C. v. Cassano, 61 F. Supp. 2d 31 (Dist. Ct.
N. Y. 1999), at p. 34:
In all the circumstances, the facts alleged are more than sufficient to give
rise to a strong inference that these defendants each had reason to know
that the information on which they traded came from IBM.