Bug: Permissions are not propagated to M:N or attributed relationship class from origin class
After granting permissions to a table or feature class within a feature dataset that participates in a many-to-many (M:N) or attributed relationship class, the table or feature class cannot be opened and an 'Insufficient Permissions' error is encountered referencing either the relationship class or destination class.
Permissions are not propagated to the intermediate table that is used with many-to-many or attributed relationship classes.
There are two workaround for this:
Grant permissions to the intermediate table through either the SDE command line or the DBMS management system.
Install ArcGIS 10.0 SP3 and grant permissions to the origin class. At 10.0 SP3, if the relationship class has many-to-many cardinality or is attributed, when privileges are assigned to the origin class, they are automatically propagated to the intermediate table. This is the only instance with relationship classes where privileges are propagated.