The test for tipper/tippee liability is the San Andreas Fault of insider trading law; it sets a line that separates fundamental investment research from fraudulent and potentially criminal conduct. The Supreme Court’s unanimous decision affirming a criminal conviction in Salman v. United States, No. 15–628 (U.S. Dec. 6, 2016), marks a clear victory for federal insider trading enforcement. It also multiplies the challenges for lawyers and compliance officers advising buy-side investors.
Family Insider Trading Cases
Salman’s facts arise from one more sad chapter in the annals of family insider trading cases. The evidence showed that Maher Kara, a former investment banker at Citigroup, provided confidential information about corporate transactions he was working on to his brother Michael, who executed stock trades using the information, and shared it with an extended family member, Bassam Salman (who also traded stocks using the information).
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