In one of the most watched business cases on the U.S. Supreme Court’s docket this term, the Court on December 6, 2016 unanimously affirmed the Ninth Circuit’s ruling upholding the insider trading conviction of Bassam Salman. Salman had traded on tips he received from the brother of a former Citigroup investment banker; Salman himself was married to the sister of the Citigroup banker. The case raised the question of whether or not the “personal benefit” that the tipper received from passing along the trading information must be pecuniary in nature in order to support an insider trading conviction for the tippee.

The Supreme Court, in an opinion written by Justice Samuel Alito, held that a jury could infer that the tipper personally benefited from making a gift of confidential information to a trading relative. The Court rejected the Second Circuit’s suggestion in its 2014 opinion in U.S. v. Newman that the tipper must also have received something of a “pecuniary or similarly valuable nature.” The Supreme Court’s December 6, 2016 opinion in the Salman case can be found here.
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