Supreme Court rules against relative tipping in insider trading case News
Supreme Court rules against relative tipping in insider trading case

[JURIST] The US Supreme Court [officia website] ruled [opinion, PDF] Tuesday in favor of the prosecution in an insider trading case involving the gifting of confidential information to a relative. Last year the US Court of Appeals for the Ninth Circuit [official website] issued a ruling in Salman v. United States [SCOTUSblog backgrounder], affirming the conviction [opinion, PDF] of a Chicago grocery wholesaler who profited from stock trades after receiving tips indirectly from his brother-in-law working for Citigroup [corporate website]. In October the Supreme Court heard oral arguments [transcript, PDF] in the matter and had to determine whether gifting information to a relative for no pecuniary gain still constituted a personal benefit to the insider. Justice Samuel A. Alito Jr. [official profile] broadly interpreted the law in question and wrote in his opinion that evidence of providing confidential information to a trading relative was enough to stay the conviction despite the absence of a direct benefit. The Supreme Court affirmed [NYT report] the lower court ruling by a unanimous vote, and the decision was applauded as a step towards fairer markets.

The enforcement of securities regulations continues to be a major concern in the US. Last month the US Securities and Exchange Commission (SEC) and the House of Representatives Ways and Means Committee [official websites] agreed [JURIST report] to provide requested material to the SEC for an insider trading investigation. In October the SEC established new liquidation risk management rules [JURIST report] for mutual funds and exchange-traded funds that require the industry to establish programs that protect shareholders in the event that investors suddenly sell off their assets. Also in October US District Judge Amos L. Mazzant III conditionally dismissed [JURIST report] an SEC suit against Texas Attorney General Ken Paxton for misleading investors. Also last month a hedge fund manager agreed on a settlement agreement [JURIST report] for SEC charges imposed for a widespread scheme involving the bribery of officials in the Democratic Republic of Congo (DRC) and Libya.