The Supreme Court Unanimously Holds That Gifts of Inside Information to Trading Relatives or Friends are Sufficient to Establish Insider Trading’s Personal Benefit Element
On December 6, 2016, in Salman v. United States, No. 15-628, the Supreme Court unanimously held that the personal benefit necessary to establish a breach of duty and insider trading liability under Dirks v. SEC, 463 U.S. 646 (1983) is satisfied where a tipper gives inside information to a trading relative or friend. By clarifying that prosecutors need not show that the insider received or expected to receive a tangible benefit to sustain insider trading liability, the Court’s narrow opinion resolves a recent split between the Second and Ninth Circuits in favor of the traditional approach advocated by federal prosecutors.