On July 22nd, the Seventh Circuit vacated, reversed, and remanded the district court's entry of summary judgment in favor of the SEC in its insider trading suit against Jilaine Bauer, the former general counsel, chief compliance officer, and chair of the pricing committee of Heartland Group, Inc., an investment company, and Heartland Advisors, Inc., an investment advisor. The SEC alleged that Bauer engaged in insider trading when she redeemed shares in a Heartland Group bond fund while in possession of material non-public information concerning the existence of liquidity and pricing issues relevant to the fund. See SEC Press Release. Based on the parties' stipulation that Bauer was an insider who possessed nonpublic information at the time she sold the shares at issue, and the district court's findings that there were no genuine issues of material fact that the information Bauer possessed was material and that she acted with scienter, the district court entered summary judgment in favor of the SEC. On appeal Bauer noted, and the SEC apparently conceded, that the classical theory of insider trading cannot apply here. Her counterparty, the bond fund, had access to the same information she had and could not be duped. The SEC then took refuge in the misappropriation theory of insider trading. But, the Seventh Circuit noted, that theory was never argued before the district court and that issue must therefore be remanded. And because if finds that genuine issues of material fact exist regarding the materiality of Bauer's knowledge and her scienter, the Seventh Circuit reversed those findings and remanded the entire case. SEC v. Bauer.