Salman v. United States: Supreme Court Considers the Scope of Tipper/Tippee Liability Under the Securities Exchange Act of 1934
The Supreme Court heard oral arguments last week, on October 5, 2016, in Salman v. United States, No. 15-628, a case requiring the Court to answer a question at the center of many insider trading prosecutions: whether the personal benefit necessary to establish liability under Dirks v. SEC, 463 U.S. 646 (1983) requires proof of “an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature,” as the Second Circuit held in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), cert. denied, No. 15-137 (U.S. Oct. 5, 2015), or only that the insider and the tippee shared a close family relationship, as the Ninth Circuit held in this case, United States v. Salman, 792 F.3d 1087 (9th Cir. 2015), cert. granted, 84 U.S.L.W. 3401 (U.S. Jan. 19, 2016) (No. 15-628).