Supreme Court upholds broad power to curb insider trading

The U.S. Supreme Court building seen in Washingt

Raj Rajaratnam, the Galleon Group co-founder in 2011, who was convicted of insider trading. Acting on them could land you in a fix. Is it illegal to trade on that? The Supreme Court disagreed.

The Supreme Court heard Salman's appeal on October 5 amid competing rulings by federal appeals courts in San Francisco, where his case was heard, and NY, where a wave of insider trading prosecutions has been pursued recently.

"The Supreme Court's decision Tuesday reverses the government's loss in 2014 when it comes to gifts of confidential information to friends and relatives", said Eric Rieder of Bryan Cave. Justice Alito said the earlier precedent "makes clear that a tipper breaches a fiduciary duty by making a gift of confidential information to a trading relative, and that rule is sufficient to resolve the case at hand".

"Golf buddies, roommates and others are back on the hook", Henning said.

The ruling was a major victory for securities regulators and prosecutors, who for two years had been grappling with the ramifications of a ruling by a New York-based federal appeals court that some had interpreted as agreeing with Salman's position. It restored some, though not all, of the leverage lost by prosecutors and the Securities and Exchange Commission in the 2014 case, which led to the dismissal or reversal of more than a dozen criminal cases.

The New York court's ruling undercut U.S. Attorney Preet Bharara's eight-year crackdown on Wall Street cheating and led to more than a dozen insider-trading convictions being thrown out. "Today's decision is a victory for fair markets and those who believe that the system should not be rigged". All have been trying to overturn their convictions on related grounds. The justices said the benefit need not be "something of a pecuniary or similarly valuable nature".

The Court may have felt the need to reiterate the principle set out in Dirks after the Second Circuit Court of Appeals appeared to narrow it two years ago in USA v. Newman, a case Salman cited in his defense.

Maher joined Citigroup as a health-care banker in 2002 and had access to inside information about upcoming deals. Justices affirmed a lower court decision that ruled in favor of Salman's conviction.

Not only is he expected to remain at his post under President-elect Donald Trump, but the Supreme Court on Tuesday gave him a big boost in an area that's close to his heart and his office: insider trading prosecutions. The ruling, known as Dirks v.

"In such situations, the tipper benefits personally because giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds", he said.

The ruling arms prosecutors with a broader definition of personal benefit.

The decision hews narrowly to Dirks v. SEC, a 1983 decision that requires prosecutors to prove that the recipient of insider information knew the tipper provided it in breach of a duty of confidentiality, and that the tipper received some benefit for it. That was a breach of his duty of trust to Citigroup, Alito said, and that breach of duty continued when Salman received the information and traded on it.



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