Reframing United States v. Salman
165 U. Pa. L. Rev. Online 1
9 Pages Posted: 13 Sep 2016
Date Written: September 13, 2016
Abstract
If a corporate insider breaches a confidence to his employer by passing along nonpublic information to a family member, who then uses it to profit in the stock market, can it be inferred that the insider must have received some sort of personal benefit in exchange for that tip? That’s the issue in United States v. Salman, a once-in-a-decade insider trading case that the Supreme Court will hear in its 2016 Term. If the issue sounds narrow, that’s because it is. In part, however, this narrowness is the result of how the case has been framed thus far. All parties involved, including the Court, seem to assume that one must prove a personal benefit in order to establish liability when insider trading involves a tip. That was true once. But the Court’s own insider-trading jurisprudence has moved beyond the logic of that requirement. The Court would do well to acknowledge this fact, thereby bringing much needed clarity to a notoriously messy and unpredictable area of law.
Keywords: insider trading, securities regulation, securities fraud, Rule 10b-5
JEL Classification: K22
Suggested Citation: Suggested Citation