Today the United States Supreme Court is hearing argument in Salman v. United States, one of the most closely watched insider trading cases to reach the high court in recent years. Salman could resolve a circuit split between the Second and Ninth Circuits and clarify generally what constitutes a personal benefit to the insider sufficient to establish insider trading under the longstanding tipper-tippee framework set forth in Dirks v. SEC, 463 U.S. 646 (1983). The personal benefit requirement is the line defining when a tippee trading on material, nonpublic information commits securities fraud. For that reason, lawyers and securities professionals alike hope that the Court’s decision in Salman will clarify the nature and type of personal benefit that must be shown in insider trading cases. This Legal Update discusses the history of tipper/tippee decisions leading up to Salman and the impact of the Court’s consideration of this case.
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