Insider Tips as Gifts: Re-examining Newman After Salman

Three pending cases – United States v. Martoma, and the habeas corpus cases Gupta v. United States and Whitman v. United States[1] – will allow the U.S. Court of Appeals for the Second Circuit to examine United States v. Newman[2] in light of Salman v. United States.[3]  In Salman, the Supreme Court rejected a Newman-based argument and held that a banker’s gratuitous tips to his brother violated Dirks v. SEC’s[4] ban on insider gifts of information to trading relatives and friends.  However, Martoma, Gupta, and Whitman have argued that Newman remains … Read more

Salman v. United States and Insider Tipping: What Could be Decided?

In Salman v. United States,[1] the Supreme Court will revisit Dirks v. SEC[2] and likely resolve the uncertainty as to personal benefit and insider gifts of confidential information that followed the Second Circuit’s decision in United States v. Newman.[3]  The case involves a young investment banker’s gifts of information about unannounced client transactions to his brother, who, in turn, shared the tips with their relative by marriage, the defendant Bassam Salman.

Salman will also be the first time that the Court decides the liability of a downstream insider trading tippee.  A decision will therefore likely … Read more