Last month, the Southern District U.S. Attorney’s Office filed an insider trading case against Walter Little and Andrew Berke. Little is accused of misappropriating confidential information from his law firm and passing it to Berke, a friend and business associate. There is no mention, however, of what personal benefit Little received by passing on the information to Berke other than their relationship. If the case were to result in a conviction, which very much remains to be seen, it may force the U.S. Court of Appeals for the Second Circuit to reexamine its holding in United States v. Newman, which was partially overruled by the Supreme Court in Salman v. United States.

The circuit’s 2014 decision in Newman—that the benefit to the tipper had to be “pecuniary or similarly valuable in nature,” and that the tippee had to have specific knowledge of that benefit—was followed by a significant decrease in insider trading prosecutions. According to Department of Justice statistics, insider trading prosecutions dropped nearly 25 percent in the year following Newman. Similarly, the number of insider trading actions brought by the Securities and Exchange Commission fell more than a third. Thus, when the Supreme Court agreed for the first time in almost twenty years to consider the propriety of an insider trading conviction in Salman v. United States, prosecutors hoped Newman would be overruled and the downward trend would end.

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