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Salman v. United States: The Supreme Court Opts for Narrow Ruling Instead of Clarity

December 20, 2016

Thomas A. Zaccaro, Nicolas Morgan, Joshua G. Hamilton, Jenifer Doan & Timothy D. Reynolds

On December 6, 2016, a unanimous Supreme Court affirmed the Ninth Circuit’s Salman v. United States pro-government decision in a narrow ruling, resolving the question of whether a demonstration of ‘‘pecuniary gain’’ on behalf of the tipper of inside information is necessary to impose insider trading liability on both the tipper and the tippee. In determining that no such requirement existed in the context of a trading relative or friend, the Supreme Court disagreed with the holding of United States v. Newman, 773 F.3d 438 (2d Cir. 2014). The Supreme Court’s comments and questions during oral argument foreshadowed that it would affirm the Ninth Circuit’s decision in Salman, but the unanimity indicates the Supreme Court’s determination to closely follow precedent as opposed to any conservative or liberal view.

This article was originally published in Bloomberg BNA

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Tim Reynolds

Of Counsel, Litigation Department

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