JUDGMENT OF THE COURT
ROSENN, Circuit Judge.
Plaintiff Benjamin Rothberg sought payment in this diversity action on two promis[253] sory notes, each executed by one of the defendants. The defendant David Rosenbloom guaranteed the note executed by defendant Sanford Rosenbloom, and all instruments were dated February 7, 1979. In answers filed by each of the defendants, they made no challenge to the validity of the notes and the guarantee, but asserted that the notes arose out of obligations created by agreements between the parties in 1969 to engage in transactions prohibited by section 10(b) of the Securities Exchange Act of 1934 as amended and Rule 10(b)-5 of the Securities Exchange Commission promulgated thereunder.
After a bench trial, the district court found that the promissory notes had their genesis in two of several joint ventures formed by the parties some ten years before for the purpose of trading on insider information contrary to law. It therefore denied Rothberg relief on an in pan delicto theory, relying on this court’s decision in Tarasi v. Pittsburgh National Bank, 555 F.2d 1152 (3d Cir.), cert. denied, 434 U.S. 965, 98 S.Ct. 504, 54 L.Ed.2d 451 (1977).
Rothberg appealed to this court, contending that Tarasi did not control because the suit was brought on the notes only, not for redress of a securities laws violation. Before a decision was rendered on that appeal, the Supreme Court overruled Tarasi in Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 86 L.Ed.2d 215, 105 S.Ct. 2622 (1985), which rejected the general availability of the in pari delicto defense to tippers of securities information sued by their tippees. This court therefore remanded Rothberg’s suit for reconsideration of the in pari delicto defense in light of Bateman Eichler. Rothberg ¶. Rosenbloom, 771 F.2d 818 (3d Cir.1985).
On remand, the district court, on the basis of the original record, held that although Bateman Eichler bars the in pari delicto defense in most suits by tippees against their tippers, this case fell within an exception set forth in that opinion, and that the in pari delicto defense was therefore available to the Rosenblooms. Furthermore, the court held that Pennsylvania law did not bar a separate defense of illegality, specifically disclaimed by the Rosenblooms, because enforcement of the notes would offend public policy. Accordingly, the court again entered judgment for the defendants. 628 F.Supp. 746. Roth-berg appeals this judgment. We reverse.
I.
A brief description of the cast of characters in the scenario before us is helpful. Plaintiff Benjamin Rothberg is a chemist and cofounder of Montrose Chemical Company. He also served as a director of the publicly held Mallory Randall Corporation for one year.1 David Rosenbloom, an officer and director of several corporations pri- or to his death, served as chairman of the executive committee and a director of Nytronics, Inc., a publicly held corporation, from 1967 through 1973. He also was a member of the control group, a salaried executive, and a director of Mallory Randall from 1968 through 1976. A graduate of the Wharton School of the University of Pennsylvania, David had twice attended but never completed law school. His brother, Sanford, is a practicing lawyer since 1955, specializing in real estate. Benson Selzer, not a party here, is a registered representative for a New York securities brokerage firm. A close friend and business associate of David, Selzer was part of the group (including David) which acquired control of Nytronics. He served as a vice-president and director of both Nytronics and Mallory Randall. Rothberg and David met when a corporation controlled by David, Centlivre Brewing Co., merged with Montrose Chemical. David introduced Rothberg to Selzer, who subsequently became Rothberg’s stock broker.
In 1968 and 1969, Rothberg entered into six “joint ventures” with either Sanford or David. All but the first of these joint [254] ventures were formed to trade on inside information available to David or Selzer as officers or directors. Rothberg, not an insider, advanced about $1,365,000 for these joint ventures, with the co-venturer (either David or Sanford) contributing only $100 each time. Under the agreements, the coventurer had the power to sell the securities involved. If the investments were profitable, all profits were to be shared equally. If the investments lost money, however, Sanford was to indemnify Roth-berg for any losses. David executed a separate guaranty for this indemnification agreement.
The first three ventures yielded profits, which were shared according to the agreement. The fourth resulted in a loss, for which the Rosenblooms accordingly indemnified Rothberg. The last two ventures, involving investments in Mallory Randall Corporation and Guitón Industries, also resulted in losses. This time, the Rosenblooms did not reimburse Rothberg.
In 1972 Rothberg agreed to extend the joint ventures and not to sue for indemnification. In return for this forbearance, Sanford gave him a demand note, guaranteed by David. In a contemporaneous letter, prepared by David, the Rosenblooms waived any defenses, counterclaims, or set-offs to the note. In 1979, the Rosenblooms, still not having paid the note, entered into an arrangement with Rothberg to give him two new notes for a liquidated sum at a reduced rate of interest, and Roth-berg agreed not to sue on the earlier note. Rothberg’s suit on these notes and the .guarantee are the subjects of this appeal.
II.
On appeal, Rothberg argues first that the district court erred in allowing an in pari delicto defense, because that defense is unavailable to the defendants under the general rule of Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985), and because the exception to that rule does not apply here. Second, he asserts that the trial court erred in holding that under Pennsylvania law the notes were unenforceable because they were related to a transaction illegal under federal law and offended public policy.2
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JUDGMENT OF THE COURT
ROSENN, Circuit Judge.
Plaintiff Benjamin Rothberg sought payment in this diversity action on two promis[253] sory notes, each executed by one of the defendants. The defendant David Rosenbloom guaranteed the note executed by defendant Sanford Rosenbloom, and all instruments were dated February 7, 1979. In answers filed by each of the defendants, they made no challenge to the validity of the notes and the guarantee, but asserted that the notes arose out of obligations created by agreements between the parties in 1969 to engage in transactions prohibited by section 10(b) of the Securities Exchange Act of 1934 as amended and Rule 10(b)-5 of the Securities Exchange Commission promulgated thereunder.
After a bench trial, the district court found that the promissory notes had their genesis in two of several joint ventures formed by the parties some ten years before for the purpose of trading on insider information contrary to law. It therefore denied Rothberg relief on an in pan delicto theory, relying on this court’s decision in Tarasi v. Pittsburgh National Bank, 555 F.2d 1152 (3d Cir.), cert. denied, 434 U.S. 965, 98 S.Ct. 504, 54 L.Ed.2d 451 (1977).
Rothberg appealed to this court, contending that Tarasi did not control because the suit was brought on the notes only, not for redress of a securities laws violation. Before a decision was rendered on that appeal, the Supreme Court overruled Tarasi in Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 86 L.Ed.2d 215, 105 S.Ct. 2622 (1985), which rejected the general availability of the in pari delicto defense to tippers of securities information sued by their tippees. This court therefore remanded Rothberg’s suit for reconsideration of the in pari delicto defense in light of Bateman Eichler. Rothberg ¶. Rosenbloom, 771 F.2d 818 (3d Cir.1985).
On remand, the district court, on the basis of the original record, held that although Bateman Eichler bars the in pari delicto defense in most suits by tippees against their tippers, this case fell within an exception set forth in that opinion, and that the in pari delicto defense was therefore available to the Rosenblooms. Furthermore, the court held that Pennsylvania law did not bar a separate defense of illegality, specifically disclaimed by the Rosenblooms, because enforcement of the notes would offend public policy. Accordingly, the court again entered judgment for the defendants. 628 F.Supp. 746. Roth-berg appeals this judgment. We reverse.
I.
A brief description of the cast of characters in the scenario before us is helpful. Plaintiff Benjamin Rothberg is a chemist and cofounder of Montrose Chemical Company. He also served as a director of the publicly held Mallory Randall Corporation for one year.1 David Rosenbloom, an officer and director of several corporations pri- or to his death, served as chairman of the executive committee and a director of Nytronics, Inc., a publicly held corporation, from 1967 through 1973. He also was a member of the control group, a salaried executive, and a director of Mallory Randall from 1968 through 1976. A graduate of the Wharton School of the University of Pennsylvania, David had twice attended but never completed law school. His brother, Sanford, is a practicing lawyer since 1955, specializing in real estate. Benson Selzer, not a party here, is a registered representative for a New York securities brokerage firm. A close friend and business associate of David, Selzer was part of the group (including David) which acquired control of Nytronics. He served as a vice-president and director of both Nytronics and Mallory Randall. Rothberg and David met when a corporation controlled by David, Centlivre Brewing Co., merged with Montrose Chemical. David introduced Rothberg to Selzer, who subsequently became Rothberg’s stock broker.
In 1968 and 1969, Rothberg entered into six “joint ventures” with either Sanford or David. All but the first of these joint [254] ventures were formed to trade on inside information available to David or Selzer as officers or directors. Rothberg, not an insider, advanced about $1,365,000 for these joint ventures, with the co-venturer (either David or Sanford) contributing only $100 each time. Under the agreements, the coventurer had the power to sell the securities involved. If the investments were profitable, all profits were to be shared equally. If the investments lost money, however, Sanford was to indemnify Roth-berg for any losses. David executed a separate guaranty for this indemnification agreement.
The first three ventures yielded profits, which were shared according to the agreement. The fourth resulted in a loss, for which the Rosenblooms accordingly indemnified Rothberg. The last two ventures, involving investments in Mallory Randall Corporation and Guitón Industries, also resulted in losses. This time, the Rosenblooms did not reimburse Rothberg.
In 1972 Rothberg agreed to extend the joint ventures and not to sue for indemnification. In return for this forbearance, Sanford gave him a demand note, guaranteed by David. In a contemporaneous letter, prepared by David, the Rosenblooms waived any defenses, counterclaims, or set-offs to the note. In 1979, the Rosenblooms, still not having paid the note, entered into an arrangement with Rothberg to give him two new notes for a liquidated sum at a reduced rate of interest, and Roth-berg agreed not to sue on the earlier note. Rothberg’s suit on these notes and the .guarantee are the subjects of this appeal.
II.
On appeal, Rothberg argues first that the district court erred in allowing an in pari delicto defense, because that defense is unavailable to the defendants under the general rule of Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985), and because the exception to that rule does not apply here. Second, he asserts that the trial court erred in holding that under Pennsylvania law the notes were unenforceable because they were related to a transaction illegal under federal law and offended public policy.2
The in pari delicto defense is related to the illegality defense in its goal of deterring wrongdoing and its policy of denying judicial relief to wrongdoers. Prior to the Supreme Court’s decision in Bateman Eichler, Hill Richards, Inc. v. Berner, supra, the circuits had disagreed whether the in pari delicto defense was available to tippers in securities litigation.3 Some courts held that the defense’s inconsistency with effective enforcement of the insider trading prohibitions of the securities acts outweighed its usefulness in tipper-tippee [255] actions. See, e.g., Nathanson v. Weis, Voisin, Cannon, Inc., 325 F.Supp. 50, 53 (S.D.N.Y.1971). Others, including this court, felt that “the prophylactic impact on the use of inside information that allowance of the defense will lead to” predominated over the deterrence value of nonrecognition of the defense. Tarasi v. Pittsburgh National Bank, supra, 555 F.2d at 1163. Tarasí had been the controlling authority for this circuit at the time of the original trial in the case at bar. Before this court issued its opinion in the first appeal, however, the Supreme Court resolved the conflict in Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985).
In Bateman Eichler, the Court noted that the in pari delicto doctrine had always required a careful consideration of public policy implications before allowing the defense. Id. at 310, 105 S.Ct. at 2628. “[I]mplied private actions,” continued the Court, “provide ‘a most effective weapon in the enforcement’ of the securities laws and are ‘a necessary supplement to Commission action.’ ” Id. (quoting J.I. Case Co. v. Borak, 377 U.S. 426, 432, 84 S.Ct. 1555, 1559, 12 L.Ed.2d 423 (1964)). Denial of the defense best promotes protection of the investing public because (1) allowing suits by a defrauded tippee will expose wrongdoers and facilitate civil, administrative, and criminal action; (2) placing pressure on insiders will maximize the deterrence of insider trading; (3) insiders are usually more responsive to the pressures of potential sanctions; and (4) tippees are deterred by means other than the in pari delicto defense. Id. at 315-19, 105 S.Ct. 2631-33. Furthermore, the Court observed that it had “eschewed rigid common-law barriers in construing the securities laws.” Id. at 310, 105 S.Ct. at 2628.
The Court therefore rejected the in pari delicto defense to implied causes of action brought by a tippee against a tipper under the federal securities laws generally, stating the rule in terms of its own two-prong exception:
[A] private action for damages in these circumstances may be barred on the grounds of the plaintiff's own culpability only where (1) as a direct result of his own actions, the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress, and (2) preclusion of suit would not significantly interfere with the effective enforcement of the securities laws and protection of the investing public.
Id. at 310, 105 S.Ct. at 2629. Rejecting the Tarasi rule, id. at 315, 105 S.Ct. at 2631, the Court concluded that “the public interest will most frequently be advanced if defrauded tippees are permitted to bring suit and to expose illegal practices by corporate insiders....” Id. at 319, 105 S.Ct. at 2633.
Because of the possible application of the Bateman Eichler exception, a previous panel of this court remanded this case to the district court specifically for the purpose of making factual findings under the new standard announced in that case. Rothberg v. Rosenbloom, 771 F.2d 818, 824 (3d Cir.1985).4 Our primary inquiry thus becomes whether the factual findings5 made by the district court support its conclusion that Rothberg bore at least substantially equal responsibility in the underlying illegal transactions. We also consider the legal question of the potential effect [256] upon the investing public of precluding this suit.
Only one other circuit has construed Bateman Eichler. In Dahl v. Pinter, 787 F.2d 985 (5th Cir.1986), the Fifth Circuit gave the extent to which the plaintiff’s illegality must outweigh the defendant’s before the threshold in the first prong of Bateman Eichler is met.6 That court held that the in pari delicto defense applies “ ‘only where some unconscionable act of one coming for relief has immediate and necessary relation to the equity that he seeks in respect of the matter in litigation.’ ” Id. at 988 (quoting Keystone Miller Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 147, 78 L.Ed. 293 (1933)) (emphasis added by the court). The court rejected the tipper’s in pari delicto defense to the tippee’s action under § 12(1) of the Securities Act of 1933.7
The Rosenblooms assert that in order to come within the Bateman Eichler exception they need only have shown that Roth-berg bears at least substantially equal responsibility for the violations of law involved. This is a gross misstatement. First, it ignores entirely the existence of the second prong of the Bateman Eichler test. Second, the first prong of the test requires substantially equal responsibility for the violations that the plaintiff seeks to redress: here, the plaintiff seeks to redress only the nonpayment of the last set of notes executed in 1979, not any of the insider transactions. See In re Olympia Brewing Co. Securities Litigation, 1986 Fed.Sec.L.Rep. (CCH) ¶ 92,461 (N.D.Ill.1985). The Rosenblooms’ quotation of only half of the rule and their alterations of its language distort the Court’s meaning almost to the point of inversion.
In support of its conclusion that the first prong of the Bateman Eichler test is met, the district court characterized Rothberg as the “instigator” of the insider trading scheme:
Although Rothberg did not come up with the specific details of the plans to trade on inside information, it was his pressure on David to come up with a means to make Rothberg more money, in short, his greed, that led to the scheme to trade on inside information____
628 F.Supp. at 752-53. This unrealistically presupposes that the tippees contemplated by Bateman Eichler are not motivated by “greed,” although it is difficult to imagine what motivations other than a desire “to make ... more money” compel them.
Even assuming that instigating and financing the joint ventures amount to “substantially equal responsibility” under Bate-man Eichler, it is far from obvious that Rothberg “instigated” these transactions. David Rosenbloom and Selzer, as officers and directors of Nytronics, possessed the inside information, not Rothberg. They had primary responsibility to their principals, and it was they who breached their fiduciary duty to that company. David Rosenbloom’s own testimony shows that it was he and Selzer who proposed the scheme to Rothberg, not the other way around.8 Furthermore, Sanford Rosen[257] bloom’s answer to Rothberg’s complaint states that the debts’ purpose was “to induce plaintiff ... to engage in transactions specifically prohibited by section 10(b) of the Securities Exchange Act of 1934____” (Emphasis added).
David Rosenbloom, the possessor of the inside information, was empowered to act for Rothberg and the others, and himself stood to profit; he did not merely pass along information. The Rosenblooms’ contention that Rothberg’s request that they provide him with some way of making money to recompense for his assistance in acquiring control of two publicly held companies somehow forced them to divulge inside information is weak indeed. Certainly, they had a reason to give Rothberg information, whether it was compensation for his assistance or, more likely, to obtain the use of his money to finance their schemes. A reason for a proposal is not duress. Rothberg’s “greed” is no more relevant than the Rosenblooms’ own.
Finally, far from supporting the finding that Rothberg was the instigator of the scheme, there is no explanation for what appears to be an additional inducement to Rothberg’s participation: the Rosenblooms’ agreement to assume the risk of all losses. This indemnification feature makes the scheme look less like an investment and more like a loan from Rothberg to the Rosenblooms and Selzer, to allow the Rosenblooms and Selzer to make much bigger investments on inside information than their own and Selzer’s funds permitted, with the quid pro quo for the loan being one-half of any profits reaped.9
We have reviewed the record and we can find no evidence to support the district court’s finding that Rothberg “instigated” the scheme to trade on insider information. The evidence is to the contrary.
The district court characterized Roth-berg, from its observation of his testimony, as “an astute, sophisticated and intelligent businessman, extremely careful about detail,” id. at 758, attributes generally found in most successful and not necessarily overbearing business persons. Although couched as a finding, the court’s observation that the plaintiff’s “culpable financing of these illegal schemes can fairly be said to outweigh David’s weakness in furnishing tips” is actually nothing more than a conclusional statement, not entitled to deference on review. Id. at 758. But does such a conclusion bear any rational relationship to the record? An analysis of David’s “weakness” reveals that it was nothing more or less than the desire to make money — the same characteristic or “weakness” that motivated Rothberg. The district court attempted to portray David, based on his testimony, as “a weak and dependent tout,” but this description is not borne out by the record. David, having graduated from the Wharton School of the University of Pennsylvania and having attended law school, had a history as a successful business entrepreneur. He had served as chairman of the executive committee and a director of Nytronics, Inc. for a half dozen years. He had been a salaried executive, director, and member of the control group of the Mallory Randall Corporation for eight years. Moreover, he had available to him the counsel and services of his brother, a practicing lawyer, and of his close friend, business associate, and securities broker, Benson Selzer.
We perceive nothing in this record that shows Rothberg dominated David’s will or exercised any undue influence over him. The evidence demonstrates nothing more than a simple scheme on the part of David and his colleagues to trade on inside information relating to David’s corporations. The information indisputably came from David, not Rothberg. The scheme originated with David, his brother, and his close friend. Their objective, like Rothberg’s, [258] was profits; they all shared in them. The Rosenblooms succeeded in having Roth-berg advance his' money to finance their share of the investments. The Rosenblooms’ reliance on Rothberg’s loan may be seen by the district court as “dependence”; others may see it as good business judgment, but for the participants’ insensitivity to the illegality of the enterprise. We are of the firm belief that the district court’s findings relating to the first prong of the Bateman Eichler exception are not supported by the evidence and are clearly erroneous.
The second Bateman Eichler prong requires a determination that “preclusion of suit would not significantly interfere with the effective enforcement of the securities laws and protection of the investing public.” This determination is a matter of policy and our review is plenary. Although the district court concluded that this prong had been met, its reasoning suggests the opposite conclusion.
The district court’s opinion strains to distinguish the facts in the case at bar to avoid the rule of Bateman Eichler. Because Rothberg, the tippee, was the financier, the court reasoned that denying him relief would “probably discourage insider trading by cutting off the transaction at its root, money.” 628 F.Supp. at 758. It is unclear why money, not access to inside information, is the “root.” Far from distinguishing the Rothberg-Rosenbloom-Selzer transactions from those addressed by Bate-man-Eichler, this tippee/financier-tipper/advisor scheme is likely to be the typical, not the exceptional pattern. It certainly seems easier for insiders to find unaware or even unscrupulous investors than for investors to find unscrupulous or careless insiders. Furthermore, in this case the tippers themselves, as well as the tippee, stood to make a profit on the inside information.
Similarly, we are not persuaded by the Rosenblooms’ attempt to distinguish this case on the basis that there was a “conspiracy”; although the scheme was collusive, it seems to have been no more so than any other tipper-tippee arrangement. Moreover, the Supreme Court noted that tippers are likely to “be more responsive to the deterrent pressure of potential sanctions; they are more likely than ordinary investors to be advised by counsel.” 472 U.S. at 317, 105 S.Ct. at 2632. Sanford Rosenbloom himself is a practicing lawyer of many years, although his specialty is real estate, not securities law. Finally, because the beneficiaries of the duty imposed by § 10(b) are the investing public, common sense suggests that insiders, not tippees, are in the more critical position to abuse the access they enjoy.
The district court added that denying the in pari delicto defense to the Rosenblooms would fail to advance the Bateman Eichler goal of exposing wrongdoing, because in the case at bar the tipper himself is trying to bring the fraud to light. We disagree. First, the statute of limitations had run for any public enforcement of the securities laws in this case. Second, and more important, this reasoning ignores the fact that the Rosenblooms exposed the wrongdoing only as a defense to Rothberg’s suit on the notes. If tippees in his position do not sue their tippers because they know they can be precluded from recovery by the in pari delicto defense, then we can expect that their tippers will never expose the wrongdoing as did the Rosenblooms. Denial of the defense here thus will have no real effect on disclosure of wrongdoing, much less “significantly interfere with the effective enforcement of the securities laws.”
Thus, the second prong of the Bateman Eichler test has not been met. We therefore hold that it was error to make the in pari delicto defense available to the defendants.
III.
In sum, the facts of this case do not bring it within the exception to the Bateman Eichler rule; the in pari delicto defense is thus unavailable to the Rosenblooms.
[259] Accordingly, the judgment of the district court will be reversed and the case remanded with directions to enter judgment on the notes in favor of the plaintiff against the defendants.
Costs taxed against defendants.