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Insider Trading Conviction Likely To Stick

October 24, 2016

Thomas A. Zaccaro,Nicolas Morgan & Sam Puathasnanon

Last week, theU.S. Supreme Court heard oral argument in the closely watched Salman v. United States, the first time the court has addressed an insider trading case since 1997. A number of the justices appeared ready to affirm the 9th U.S. Circuit Court of Appeals' decision in Salman, which would hand the U.S. Department of Justice and the Securities.

The Supreme Court is expected to address the "personal benefit" test that has puzzled practitioners and experts alike. Specifically, the court granted certiorari on the question of whether the personal benefit test articulated by Dirks v. SEC, 463 U.S. 646 (1983), requires proof that the tipper received a "tangible" or 1'pecuniary" gain from the tip, or whether it is enough that the insider and tippee shared a close family relationship.

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