MINER, Circuit Judge:
Defendant-appellant Robert Chestman appeals from a judgment of conviction entered May 9, 1989, after a jury trial, in the United States District Court for the Southern District of New York (Walker, J.). Chestman was convicted of ten counts of securities fraud in violation of 15 U.S.C. §§ 78j(b) (“section 10(b)”), 78ff (1988), 18 U.S.C. § 2 (1988), and 17 C.F.R. § 240.10b-5 (1988) (“rule 10b-5”); ten counts of fraudulent trading in connection with a tender offer in violation of 15 U.S.C. §§ 78n(e) (“section 14(e)”), 78ff, 18 U.S.C. § 2, and 17 C.F.R. § 240.14e-3 (“rule 14e-3”); ten counts of mail fraud in violation of 18 U.S.C. §§ 1341, 2; and one count of perjury in violation of 18 U.S.C. § 1621.
On appeal Chestman contends that 1) the government failed to prove either a misappropriation of nonpublic information or the existence of a relationship of trust and confidence sufficient to establish the requisite duty under rule 10b — 5; 2) the mail [77]*77fraud conviction must be reversed because the alleged victims lacked a cognizable property interest; 3) his perjury conviction was not supported by sufficient evidence; and 4) his conviction under rule 14e-3 was improper because the Securities and Exchange Commission (SEC) exceeded its rulemaking authority in promulgating the rule.
The judgment of conviction is reversed for the reasons that follow.
BACKGROUND
Robert Chestman was a stockbroker and financial advisor for the brokerage house of Gruntal & Co. (Gruntal). In 1982 Chest-man met with Keith Loeb to discuss Loeb’s transfer of various brokerage accounts to Gruntal with the aim of consolidating his accounts, specifically his holdings in Wald-baum, Inc. (Waldbaum), a public company with shares trading in the over-the-counter market. At that time, Loeb indicated that his wife, Susan, was the niece of Ira Wald-baum, the president and controlling shareholder of Waldbaum. Ira and his immediate family owned approximately 51% of the outstanding Waldbaum stock. Ira’s sister, Shirley Witkin, owned a large block of the stock of Waldbaum, and her children, including Susan Loeb, owned less than 1%. During the course of Chestman’s relationship with Loeb, Chestman executed for him several transactions involving Waldbaum restricted and common stock. In order to facilitate some of the trades, Loeb had to send Chestman a copy of his wife’s birth certificate, which indicated that Susan Loeb was the daughter of Shirley Waldbaum Witkin.
In November 1986, Ira Waldbaum entered into negotiations for the sale of Wald-baum to the Great Atlantic and Pacific Tea Company, Inc. (A & P). A & P and Wald-baum executed a stock purchase agreement on November 21 requiring Ira, as attorney-in-fact for the Waldbaum family stockholders, to tender a controlling block of Wald-baum shares to A & P in exchange for payment of $50 per share. Ira told Shirley he would tender her shares as part of the sale to enable her to avoid the administrative problems of tendering after the public announcement. He also cautioned her “that [it was] not to be discussed” and was to remain confidential. She turned the stock over to Ira on November 24.
Susan Loeb became concerned when she could not locate her mother at home on the morning of November 24. When she spoke to her mother later that day, her mother revealed that she had gone out to turn the shares over to Ira. Mrs. Witkin told her daughter about the impending sale and stated that “it was very important that [she] didn’t tell anybody about it because it could ruin the sale. And that financially it was going to be a beneficial thing.” She further told Susan not to tell anyone except her husband. The next day, Susan told her husband about the sale and admonished him not to tell anyone because “it could possibly ruin the sale.”
On November 26, Keith Loeb telephoned Chestman at 8:58 a.m. but was unable to contact him. The call from Loeb and the message “asap” was recorded on a message slip. Loeb testified that he spoke to Chestman by telephone from his factory in New Jersey sometime between 9 a.m. and 10:30 a.m., when he left for his office in New York City. Loeb told Chestman that he “had some definite, some accurate information” that Waldbaum was being sold at a “substantially higher” price than the market value of its stock. Loeb “asked [Chestman] what he thought I should do” with the information, but Chestman refused to give him a definite answer.
At 9:49 a.m. Chestman purchased 3000 shares of Waldbaum for himself at $24.65 per share. Between 11:31 a.m. and 12:35 p.m. Chestman purchased a total of 8000 shares for his discretionary accounts at prices ranging between $25.75 and $26.00 per share. Included in these purchases were 1000 shares for the Loeb account. He recorded all the discretionary account trades on his desk blotter but did not write Loeb’s name next to the trade for the Loeb account.
Loeb testified that he again contacted Chestman before 4:00 p.m. and ordered the purchase of 1000 shares. Chestman denied [78]*78having spoken to Loeb before 9:49 a.m. and did not recall an order from Loeb later in the afternoon. Chestman’s administrative assistant testified that Loeb called around 9 or 10 a.m., that he called a second time in the “late morning” or “early afternoon,” and that, as of the second call, Loeb still had not spoken to Chestman.
The tender offer was announced at the close of trading on November 26, and the price of Waldbaum shares rose to $49.00 on the next trading day. On the following Saturday, Loeb received the confirmation slip, feigning surprise about the purchase in the presence of his wife.
In December, Keith Loeb learned that the National Association of Securities Dealers had commenced an investigation into the Waldbaum transactions. Loeb contacted Chestman who, according to Loeb, attempted to quell his fears. Chestman claimed he bought the stock for Loeb based upon research. Thereafter, Chestman allegedly asked Loeb about his “position,” and Loeb stated “I guess it’s the same thing.”
On April 3, 1987, Loeb learned he was likely to be subpoenaed by the SEC. Loeb immediately contacted Chestman, who again stated that he bought the stock on the basis of his research. A similar conversation occurred on April 7. Loeb eventually entered into a cooperation agreement with the government by the terms of which he disgorged profits from 1000 shares and paid an additional fine.
Chestman appeared before the SEC in connection with the investigation on April 15, 1987. He testified that he did not recall speaking with Loeb on the morning of November 26 or receiving inside information. He asserted that the purchases of November 26 were the product of research, consistent with his previous purchases of Waldbaum and other retail food stocks and in accord with reports in trade publications and the unusually high trading volume of the stock on November 25.
At trial, Chestman maintained the position he had taken before the SEC. The jury convicted Chestman of ten counts of securities fraud, in violation of section 10(b) and rule 10b — 5; ten counts of mail fraud; ten counts of fraud in connection with a tender offer under section 14(e) and rule 14e-3; and one count of perjury in connection with his testimony before the SEC.
DISCUSSION
I. Securities Fraud
Chestman was convicted on 10 counts charging him with violations of section 10(b) and rule 10b-5. With regard to the 1000 shares purchased on behalf of Keith Loeb, Chestman was convicted in Count 2 of aiding and abetting Loeb in misappropriating material non-public information in breach of Loeb’s duty to the Waldbaum family. With regard to the purchases he made for himself and customers other than Loeb, Chestman was convicted on the remaining 9 counts for trading as a “tippee” of the same material non-public information purportedly appropriated by Loeb in breach of the duty of trust and confidence by which he was bound.
Rule 1 Ob-5, promulgated pursuant to the rulemaking authority delegated under section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), makes it “unlawful for any person ... [t]o engage in any act ... which operates ... as a fraud or deceit upon any person, in connection with the purchase or sale of any security.” 17 C.F.R. § 240.10b-5 (1988). Fraudulent securities practices of all kinds are encompassed by the rule, see Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976), which must be construed “not technically and restrictively, but flexibly to effectuate its remedial purposes.” Affiliated Ute Citizens v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 1471, 31 L.Ed.2d 741 (1972) (quoting SEC v. Capital Gains Research Bureau, 375 U.S. 180, 195, 84 S.Ct. 275, 284, 11 L.Ed.2d 237 (1963)). Included in the prohibited practices is the misappropriation of “valuable nonpublic information entrusted to [a person] in the utmost confidence.” SEC v. Materia, 745 F.2d 197, 201 (2d Cir.1984), cert. denied, 471 U.S. 1053, 105 S.Ct. 2112, 85 L.Ed.2d 477 (1985) (quoting Chiarella v. [79]*79United, States, 445 U.S. 222, 245, 100 S.Ct. 1108, 1123, 63 L.Ed.2d 348 (1980) (Burger, C.J., dissenting)). “[T]he [misappropriation] theory premises liability on a party’s deception of those who have given him privileged access to confidential information.” Aldave, Misappropriation: A General Theory of Liability for Trading on Nonpublic Information, 13 Hofstra L.Rev. 101, 124 (1984).
Persons having access to confidential information by reason of various types of special relationships with information sources have been convicted of securities fraud under the misappropriation theory. See, e.g., United States v. Grossman, 843 F.2d 78 (2d Cir.1988) (member of law firm); Materia, 745 F.2d 197 (employee of printing establishment); United States v. Newman, 664 F.2d 12 (2d Cir.1981) (employees of investment banks), aff'd after remand, 722 F.2d 729, cert. denied, 464 U.S. 863, 104 S.Ct. 193, 78 L.Ed.2d 170 (1983); United States v. Carpenter, 791 F.2d 1024 (2d Cir.1986), aff'd, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987) (financial columnist); SEC v. Musella, 578 F.Supp. 425 (S.D.N.Y. 1984) (manager of office services for law firm); cf United States v. Reed, 601 F.Supp. 685 (S.D.N.Y.), rev’d on other grounds, 773 F.2d 477 (2d Cir.1985) (son of corporate director).
The aiding and abetting count here requires proof that Keith Loeb, in breach of a special relationship of trust, misappropriated valuable non-public information acquired by him in confidence; that Chest-man voluntarily acted to assist him in the misappropriation; and that Chestman furnished the assistance with the specific intent to bring about this variety of securities fraud. See United States v. Aiello, 864 F.2d 257, 262-63 (2d Cir.1988); United States v. Wiley, 846 F.2d 150, 154 (2d Cir.1988).
The count charging Chestman as a tippee requires proof that Keith Loeb, the tipper, furnished the misappropriated information regarding the Waldbaum sale to Chestman as tippee. See Carpenter, 791 F.2d at 1032; 5A A. Jacobs, Litigation and Practice Under Rule 10b-5 § 66.02[a][iii][F], at 3-494.32 to .33 (1989); Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 313 n. 22, 105 S.Ct. 2622, 2630 n. 22, 86 L.Ed.2d 215 (1985). A tippee is held to assume the liability of his tipper upon a showing of: a duty owed by the tipper; a breach of that duty by the tipper; and knowledge of the breach by the tippee. Dirks v. SEC, 463 U.S. 646, 660, 103 S.Ct. 3255, 3264, 77 L.Ed.2d 911 (1983); 15 U.S.C. § 78ff(a).
Evidence that Keith Loeb revealed the critical information in breach of a duty of trust and confidence known to Chestman is essential to the imposition of liability upon Chestman as aider/abettor, Materia, 745 F.2d at 201, or as tippee, Dirks, 463 U.S. at 660. Such evidence is lacking here. Although Chestman was aware that Loeb was a member of the Waldbaum family and may well have gathered that the “definite” and “accurate” information furnished by Loeb was not generally available, there simply is no evidence that he knew that Loeb was breaching a confidential relationship by imparting the information to him. The government can point to nothing in the record demonstrating actual or constructive knowledge on the part of Chestman that Keith Loeb was pledged to secrecy by Susan Loeb, who was pledged to secrecy by Shirley Witkin, who was pledged to secrecy by Ira Waldbaum. Loeb testified on direct examination that he could not recall describing the information as confidential, and there is no evidence that he ever alluded to the source of his information. Cf. Materia, 745 F.2d at 202. It is impossible to attribute knowledge of confidentiality to Chestman in view of the attenuated passage of the information and in the absence of any showing that the information retained any kind of confidentiality in the hands of Keith Loeb.
Even assuming knowledge of Loeb’s duty of confidentiality on the part of Chest-man, there is no demonstration of the acceptance of that duty by Loeb. There is presented here a chain of relationships, each link purportedly representing a pledge of trust and confidence. But there is no showing of any assurance, express or im[80]*80plied, by any of those to whom the information was confided, that confidentiality would be maintained. See Walton v. Morgan Stanley & Co., 623 F.2d 796, 799 (2d Cir.1980). Without more, such as a course of dealing, a family relationship alone cannot carry an implied promise that confidences of this kind will be maintained. Compare Reed, 601 F.Supp. at 706 & n. 32.
In Reed, relied upon by the government, the defendant was the son of a corporate director who traded on nonpublic information, given to him by his father, about a pending merger between the father’s company and another corporation. Id. at 690. The defendant sought to dismiss specific counts of the indictment, arguing that the government could not sustain its burden of establishing a relationship of trust and confidence. Id. at 705. The district court determined that the issue was for the jury and denied defendant’s motion. Id. at 717-18. A distinguishing factor in Reed is that the father had disclosed information involving affairs of the corporation on several occasions. Id. at 705. There is no evidence that the members of the Waldbaum family had a history of reposing business confidences in one another.
The securities fraud convictions are reversed.
II. Mail Fraud
The mail fraud statute prohibits the use of the mails for the purpose of executing “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses.” 18 U.S.C. § 1341. The “property” referred to in the statute includes such intangible property as confidential, non-public business information. Carpenter, 484 U.S. at 26, 108 S.Ct. at 324. Various schemes to misappropriate such information have served as the bases for convictions under the mail fraud statute. See, e.g., United States v. Kent, 608 F.2d 542, 545 (5th Cir.1979), cert. denied, 446 U.S. 936, 100 S.Ct. 2153, 64 L.Ed.2d 788 (1980); United States v. Louderman, 576 F.2d 1383, 1387 (9th Cir.), cert. denied, 439 U.S. 896, 99 S.Ct. 257, 58 L.Ed.2d 243 (1978).
In the case at bar, Chestman was charged with misappropriating information about the sale of Waldbaum to A & P as part of the fraudulent scheme engaged in with Loeb to defraud the members of the Waldbaum family. In his defense, Chest-man contends that the information was merely “family gossip” when Susan Loeb received it and that it therefore was not “property” when obtained. Chestman also contends that Susan was the only possible target of the alleged mail fraud but could not be defrauded because she lacked any cognizable interest in the property.
There can be no misappropriation of information by one who is unaware of the confidentiality of that information. See Carpenter, 484 U.S. at 26, 108 S.Ct. at 324. As previously noted, there is no basis for a determination that Chestman had the requisite knowledge. Chestman merely was informed by Keith Loeb that Waldbaum was being sold at a price higher than the market value of the stock. It cannot be inferred that Chestman had constructive knowledge of the confidentiality of this information simply because he knew Loeb’s wife to be a member of the Waldbaum family. After passing through several family channels, it cannot be said that the information was confidential to any degree or was any more than “family gossip.”
The mail fraud convictions cannot be sustained, and they are reversed.
III. Perjury
The indictment charged Chestman with giving false testimony in denying that he 1) spoke to Loeb before purchasing Wald-baum shares for himself; 2) spoke to Loeb before purchasing 1000 shares for Loeb’s account; 3) received confidential information from Loeb concerning the sale of Waldbaum; and 4) attempted to effect a cover-up regarding the events of November 26, 1986. The sufficiency of proof regarding each of these allegations is discussed in turn.
The undisputed “rule in prosecutions for perjury is that the uncorroborated oath of one witness is not enough to establish the [81]*81falsity of the testimony of the accused set forth in the indictment....” Hammer v. United States, 271 U.S. 620, 626, 46 S.Ct. 603, 604, 70 L.Ed. 1118 (1926). The “two-witness” rule requires that the alleged per-jurious statement be established either by the testimony of two independent witnesses or by one witness and corroborating evidence that is “ ‘inconsistent with the innocence of the [defendant].’ ” United States v. Weiner, 479 F.2d 923, 926 (2d Cir.1973) (quoting United States v. Hiss, 185 F.2d 822, 824 (2d Cir.1950), cert. denied, 340 U.S. 948, 71 S.Ct. 532, 95 L.Ed. 683 (1951)).
The indictment charged, in part, that Chestman falsely testified at the SEC hearing when he stated that he had not spoken to Loeb prior to the purchase of Waldbaum stock for himself. The order for the stock was placed at 9:49 a.m. At trial, Loeb testified that he spoke to Chest-man prior to 10:30 a.m. The government’s focus on the sufficiency of the corroborative evidence disregards an essential element under the two-witness rule — the testimony of at least one witness that purports to establish the falsity of the accused’s testimony. In the case at bar, the independent witness, Loeb, was unable to pinpoint when he spoke to Chestman. At best, Loeb placed the conversation as occurring sometime prior to 10:30 a.m. Regardless of the sufficiency of the proffered corroborative evidence, there is simply no testimony from Loeb that he spoke to Chestman prior to 9:49 a.m. In the absence of testimony from at least one witness placing the conversation prior to 9:49 a.m., the perjury conviction cannot be sustained as to that conversation.
As to the remaining allegations of the perjury count as they relate to the events of November 26, Loeb’s testimony that he spoke to Chestman prior to 10:30 a.m. would be sufficient, if supported by corroborative evidence, to sustain a perjury conviction. We therefore examine the sufficiency of the corroborative evidence proffered by the government in support of Loeb’s testimony.
In assessing the sufficiency of the corroborative evidence, two elements are considered: “1) that the evidence, if true, substantiates the testimony of a single witness who has sworn to the falsity of the alleged perjurious statement; 2) that the corroborative evidence is, trustworthy.” Weiler v. United States, 323 U.S. 606, 610, 65 S.Ct. 548, 550, 89 L.Ed. 495 (1945). While the independent evidence must be inconsistent with the innocence of the accused, it need only “tend to substantiate that part of the testimony of the principal prosecution witness which is material in showing” the accused’s statement is false. Weiner, 479 F.2d at 927-28.
The corroborative evidence relied on by the government is wholly insufficient to satisfy the two-witness rule. For instance, the phone message at 8:58 a.m. merely establishes that Loeb attempted to contact Chestman and that Chestman was not in his office. Thus, it is equally supportive of Chestman’s contention that he did not speak to Loeb on the morning of November 26. It does not establish that Chestman returned Loeb's call prior to 10:30 a.m. Chestman’s position is buttressed further by the testimony of his administrative assistant. She testified that Loeb called between 9 and 10 a.m. and then again in the late morning or early afternoon. She noted that as of the time of the second phone call Loeb had not yet spoken to Chestman. The theory put forth by the government that stockbrokers always return calls by virtue of the nature of their business requires a presumption we do not care to adopt in the context of a perjury charge.
While the government also highlights the fact that Chestman’s blotter notes omitted reference to the Loeb trade, we are unconvinced that this provides adequate proof that Chestman spoke to Loeb prior to execution of the trades. These notations were made solely for Chestman’s personal use. As an experienced stockbroker, he certainly realized that the Loeb trade could not be concealed because it would be memorialized by the order and subsequent confirmation slip. Under these circumstances, the blotter omissions cannot serve as corroboration.
[82]*82The government also would have this Court rely on the propitious timing of the trade as sufficient support for Loeb’s testimony. Sole reliance on the timing of the trade would nullify the purpose of the two-witness rule. We recognize that the circumstances surrounding an alleged perjurious statement may constitute better corroborative evidence than oral testimony. Hammer, 271 U.S. at 627, 46 S.Ct. at 604. When a jury relies on circumstantial evidence, however, it must be demonstrated that this evidence has “independent probative value” if “standing alone.” United States v. Freedman, 445 F.2d 1220, 1226 (2d Cir.1971). The timing of the trade here does not meet the standard. The fact that Chestman bought Waldbaum stock prior to the announcement of the tender offer is consistent with Chestman’s position that he researched the company, assumed it was a takeover target, and invested accordingly. Standing alone, the timing of the trade does not have sufficient independent probative value to support the Loeb testimony at odds with that position. See Freedman, 445 F.2d at 1226.
In attempting to prove that Chestman testified falsely about the existence of a cover-up, the government placed special importance on a conversation between Chest-man and James Spingarn, Gruntal’s senior vice president in charge of compliance. Spingarn interviewed Chestman in December 1986 concerning the Waldbaum stock purchases. Essentially, Chestman assured him that there was no impropriety surrounding the purchases, and he noted the relatively small position he had taken in Waldbaum stock. Loeb testified regarding a similar conversation with Chestman. We are perplexed by the government’s reliance on these conversations, because they are consistent with Chestman’s position that he did not attempt to effectuate a cover-up of the events of November 26. Chestman does not deny speaking to Loeb after the 26th to “allay [Loeb’s] fears” about the investigation. The fact that he had given Spingarn the same explanation he gave to Loeb adds no independent corroboration of cover-up perjury.
Finally, one of the allegedly false declarations giving rise to the perjury conviction was Chestman’s denial that he was told by Keith Loeb that Loeb “had confidential information concerning Waldbaum.” With regard to this declaration, it is sufficient to highlight the fact that Loeb could not “recall specifically using the word ‘confidentiality’ ” when he spoke to Chestman on November 26. Therefore, the government could not present even one witness who could establish that Chestman was alerted to the confidential nature of the information.
After careful review, we find the evidence insufficient to sustain the conviction. Accordingly, we reverse Chestman’s conviction for perjury.
IV. Rule 14e-3
Section 14(e) of the Securities Exchange Act, enacted in 1968, makes it unlawful for any person “to engage in any fraudulent, deceptive, or manipulative acts or practices” in connection with a tender offer. 15 U.S.C. § 78n(e). The section was amended in 1970 to provide that “[t]he [Securities and Exchange] Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative.” Id.
The Williams Act, which added section 14(e) to the securities law, was adopted for the protection of “investors who are confronted with a tender offer.” Piper v. Chris-Craft Indus., 430 U.S. 1, 35, 97 S.Ct. 926, 946, 51 L.Ed.2d 124 (1977). According to the Supreme Court, the 1970 amendment was designed to “provide[] a mechanism for defining and guarding against those acts and practices which involve material misrepresentation or non-disclosure. The amendment gives the [SEC] latitude to regulate nondeceptive activities as a ‘reasonably designed’ means of preventing manipulative acts_” Schreiber v. Burlington Northern, Inc., 472 U.S. 1, 11 n. 11, 105 S.Ct. 2458, 2464 n. 11, 86 L.Ed.2d 1 (1985) (quoting section 14(e)). By enacting section 14(e), Congress sought to ensure that [83]*83all investors confronted with a tender offer would have access to information pertinent to making an informed decision. Id. at 11-12,105 S.Ct. at 2464. “All three species of misconduct [specified in section 14(e)], i.e., ‘fraudulent, deceptive, or manipulative’ ... are directed at failures to disclose.” Id. at 8, 105 S.Ct. at 2462.
Acting under the authority of the 1970 amendment, the SEC in 1980 adopted rule 14e-3, which defines as “a fraudulent, deceptive or manipulative act” the purchase or sale of a security by one “who is in possession of material information relating to [a] tender offer which information he knows or has reason to know is nonpublie and which he knows or has reason to know has been acquired directly or indirectly” from the issuer, an officer, or any person acting on the issuer’s behalf. 17 C.F.R. § 240.14e-3(a).
Chestman’s challenge to his convictions for fraudulent trading in connection with a tender offer is grounded upon his claim that the SEC exceeded its rulemaking authority under section 14(e) when it adopted rule 14e-3 in its present form. Specifically, Chestman asserts that the rule improperly imposes liability: in the absence of either a duty to disclose or a fiduciary duty; for trading while in the possession of material nonpublic information, whether or not such information is used in effecting the transaction; and on the basis of a “quasi-negligence standard.”
Rules and regulations adopted by an administrative agency pursuant to authority expressly conferred upon the agency by Congress are said to have “legislative effect” and are therefore “entitled to more than mere deference or weight.” Batterton v. Francis, 432 U.S. 416, 425, 426, 97 S.Ct. 2399, 2405, 2406, 53 L.Ed.2d 448 (1977). The only rules that may be rejected are those “inconsistent with the statutory mandate or that frustrate” congressional policy. Federal Election Comm’n v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 32, 102 S.Ct. 38, 42, 70 L.Ed.2d 23 (1981). Rule 14e-3, however, is consistent with the congressional goal of protecting investors in the tender offer context, and the specific challenge put forward by Chestman must be rejected.
Chestman relies substantially on a statement in Schreiber, 472 U.S. at 10, 105 S.Ct. at 2463, that section 14(e) added a broad anti-fraud provision modeled after section 10(b) and rule 10b-5. He therefore contends that rule 14e-3 should impose liability only when a fiduciary duty or confidential relationship exists. See Chiarella, 445 U.S. at 232, 100 S.Ct. at 1116. But rule 14e-3 imposes a duty to disclose or abstain from trading, in the context of a tender offer, on the part of any person in possession of material, nonpublic information obtained from an insider. A fiduciary duty or confidential relationship is not required; The rule achieves the purpose of Congress by ensuring through disclosure that shareholders have adequate information to assess relevant facts before deciding to tender their shares. Schreiber, 472 U.S. at 12, 105 S.Ct. at 2464. Consistent with this emphasis on disclosure, rule 14e-3 focuses on the acts of the issuer, offeror or any person who has material nonpublic information acquired directly or indirectly from the issuer in connection with a tender offer. 17 C.F.R. § 240.14e-3.
While the Supreme Court noted that section 14(e) was modeled after section 10(b), it emphasized that section 14(e) requires disclosure “more explicitly addressed to the tender offer context than that required by § 10(b).” Schreiber, 472 U.S. at 11, 105 S.Ct. at 2464. Rule 14e-3 was adopted under the authority of a broad congressional mandate to prescribe all “means reasonably designed” to prevent manipulative acts, including the regulation of nondecep-tive activities. It is the congressional emphasis on disclosure in the tender offer setting that permits such regulation and which distinguishes the rulemaking power under section 14(e) from the rulemaking power under section 10(b). Moreover, congressional approval of the Insider Trading Sanctions Act of 1984, providing treble damages for rule 14e-3 violations, suggests congressional acceptance of the rule as promulgated by the SEC. See H.R.Rep. No. 355, 98 Cong. 1st Sess. 13 n. 20 (1983), [84]*84reprinted in 1984 U.S.Code Cong. & Admin.News 2274, 2286 n. 20.
Chestman’s contention that rule 14e-3 is invalid because it proscribes trading while in “mere possession” of inside information, rather than actual use of the information, finds no support in the rule itself. First, the rule requires more than mere possession; it requires that the trader know, or have reason to know, that the information is material and nonpublic and derives directly or indirectly from an insider. See 17 C.F.R. § 240.14e-3(a). Second, in light of the broad rulemaking authority granted to the SEC to protect investors confronted by a tender offer, it would weaken the potency of this grant of authority to require actual proof of reliance. Trading, with the requisite knowledge, is sufficient.
As to Chestman’s contention that the “know or have reason to know” language of the rule imposes a quasi-negligence standard, it is sufficient to observe that the district judge charged the jury that a conviction for violating the rule required a finding that Chestman acted “knowingly and willfully.” The district court determined that the mens rea required was that established in section 32(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78ff(a), which requires willful misconduct. Accordingly, the jury was instructed that actual knowledge and willful misconduct were required. See United States v. Dixon, 536 F.2d 1388, 1395 (2d Cir.1976). The district court here made it clear to the jury that there could be no conviction if Chestman’s conduct resulted from “innocent mistakes, negligence or inadvertence or other innocent conduct.”
I would affirm the judgment of conviction as to the rule 14e-3 counts.
CONCLUSION
In view of the foregoing, and of the separate opinions filed herewith, the judgment appealed from is reversed in all respects. The mandate shall issue forthwith.
MAHONEY, Circuit Judge and CARMAN, J., join in all but Part IV of this opinion, as to which each files a separate opinion.