For the first time in nearly two decades, the U.S. Supreme Court has ruled on what does, or does not, constitute insider trading. On December 6, the Court issued its eagerly anticipated ruling in Salman v. United States, unanimously affirming the 9th Circuit's affirmance of Salman's guilty verdict for insider trading. In doing so, the Court also overruled the 2nd Circuit's holding in Newman and created unanswered questions that will await resolution of future cases.
In the Compliance Week article, "SCOTUS Ruling a Boon For Prosecutors, But Questions Linger", RK&O partner Steven Paradise weighed in on the significance of the Salman decision. He noted that "because some commentators had anticipated that some members of the court may try to use this case to reign in insider-trading prosecutions, for the government and defense, the next battle line is likely to be drawn over whether a relationship between a tipper and tippee is sufficiently close to make them 'friends' or something akin to a relative and thereby eliminate the requirement that the tipper have received a tangible benefit in return for his information to have breached his fiduciary duty."
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