Supreme Court Gives Government Victory on Significant Insider Trading Case

December 06, 2016

The Supreme Court in Salman v. United States earlier today issued its most significant ruling in an insider trading case in more than two decades. In a unanimous, brief opinion written by Justice Alito, the Supreme Court affirmed the Ninth Circuit and ruled that Salman’s insider trading conviction was appropriate in light of the Court’s 1983 ruling in Dirks v. SEC. The Supreme Court held that federal insider trading laws prohibit corporate executives from giving gifts of confidential information to their family and friends, and rejected Salman’s argument that the government must prove the individual providing the information received a tangible personal benefit in exchange for the information. In upholding Salman’s conviction, the Supreme Court reaffirmed the holding in Dirks that “when an insider makes a gift of confidential information to a trading relative or friend . . . [t]he tip and trade resemble trading by the insider himself followed by a gift of the profits to the recipient.” The decision represents a clear victory for federal prosecutors and a partial reversal of the Second Circuit’s contrary 2014 decision in United States v. Newman.

Read the full article here.