Podcast Center
Video Center
Webcasts
Resource Center
Events
December 06, 2016 at 11:19 AM
In a win for federal prosecutors, the U.S. Supreme Court on Tuesday embraced a broad interpretation of insider-trading rules that will allow the government to pursue cases even when it cannot be shown that the insider was trying to benefit from giving the tip.
Justice Samuel Alito Jr., himself a former U.S. attorney in New Jersey, wrote for a unanimous court, upholding a decision by the U.S. Court of Appeals for the Ninth Circuit in the case of Chicago businessman Bassam Salman. He was convicted for trading on information he received second-hand from the brother of his sister’s husband, even though the tipper himself did not make money from the interactions.
“The jury could infer that the tipper here personally benefited from making a gift of confidential information to a trading relative,” Alito wrote. “In such situations, the tipper benefits personally because giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds.” The fact that the tipper, who worked for Citigroup, breached his fiduciary duty to the company by disclosing the tip, was key.
The ruling Tuesday sweeps aside the 2014 United States v. Newman ruling by the U.S. Court of Appeals for the Second Circuit that had made it harder for the government to go after tippers and tippees.
