Term: 2016
Docket: 15-628
Salman v. United States
- Pro
15-628 SALMAN V. UNITED STATES DECISION BELOW: 792 F.3d 1087 LIMITED TO QUESTION 1 PRESENTED BY THE PETITION. CERT. GRANTED 1/19/2016 QUESTION PRESENTED: 1. Does the personal benefit to the insider that is necessary to establish insider trading under Dirks v. SEC, 463 U.S. 646 (1983), require proof of "an exchange that is objective, consequential, and represents at least a potential gain of a pecuniary or similarly valuable nature," as the Second Circuit held in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), cert. denied, No. 15-137 (U.S. Oct. 5, 2015), or is it enough that the insider and the tippee shared a close family relationship, as the Ninth Circuit held in this case? 2. Can failure to investigate suspicious circumstances, without more, constitute the "deliberate actions" to avoid knowledge that this Court found necessary to establish willful blindness in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011)? LOWER COURT CASE NUMBER: 14-10204
In Salman v. United States, the Supreme Court unanimously upheld a conviction for insider trading. The case involved Bassam Salman, who had received confidential information from his brother-in-law Maher Kara, an investment banker at Citigroup. Using this information, Salman made over $1 million in profits on the stock market. He was subsequently charged with insider trading and convicted by a jury trial in 2013. The key issue before the court was whether it is enough to prove that an inside tipper disclosed nonpublic material for personal benefit or if prosecutors must also show that he/she received something of value in exchange for the tip - as required by another ruling (U.S vs Newman). In its decision, written by Justice Alito, the court held that when a tipper gives inside information to "a trading relative or friend", it is easy to infer benefits of various sorts even without proof of any tangible gain. Therefore under such circumstances proving receipt of something valuable isn't necessary; thus affirming Salman's conviction.
In the Supreme Court case Salman v. United States, there was no dissenting opinion as the court ruled unanimously (8-0) in favor of upholding Bassam Salman's conviction for insider trading. The decision affirmed that a gift of confidential information to a friend or family member also constitutes insider trading, even if no financial benefit is received by the person disclosing the information. This ruling clarified an area of law that had been left ambiguous by previous decisions and provided clearer guidelines for future cases involving similar circumstances.
