Supreme Court in Salman Says: “This One Is Easy,” Reaffirming Dirks and Rejecting Newman

December 15, 2016

The U.S. Supreme Court (Alito, J.) issued a unanimous decision Dec. 6, affirming the Ninth Circuit’s decision in Salman v. United States, 85 U.S.L.W. 4015, 2016 BL 404946 (U.S. Dec. 6, 2016), an insider trading case concerning tippee liability.

The Court held that the personal benefit element in an insider trading case could be met solely by showing that a tipper had gifted confidential information to a trading friend or relative.

In arriving at that conclusion, the Court ruled that the Second Circuit had misconstrued the Supreme Court’s decision in Dirks v. SEC, 463 U.S. 646 (1983), when it held in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), that the personal benefit element could not be established based on a gift of confidential information to a trading friend or relative without additional evidence showing an exchange that is "objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature."

To continue reading Harry Sandick, Daniel Ruzumna and Jared Buszin's article from Bloomberg BNA’s The United States Law Week, please click here.