December 22, 2016

22 December 2016

Supreme Court Affirms Insider Trader Ruling in Salman v. United States

On December 6, the Supreme Court unanimously affirmed a Ninth Circuit decision involving the scope of “personal benefit” required to find insider trading under the securities laws.  Salman involved an investment banker who provided inside information about pending mergers to his brother, intending that the brother would benefit from the information.  The brother traded on the tips and (without his brother’s knowledge) tipped additional friends – including Salman – who also traded.  The Court determined the facts of this case fell within the language of the 1983 Dirks decision, which found that a tipper breaches a fiduciary duty by making a gift of confidential information to a “trading relative.”  The Court did not agree with Salman’s position that only a clear pecuniary benefit to the tipper should trigger liability.