The Future of Insider Trading Law: The Supreme Court and Salman
Program Number: 2640
Presenter: Thomas O. Gorman, Esq.
This term the Supreme Court will hear U.S. v. Salman, the insider trading case based on what a jury found to be illegal tipping. The Ninth Circuit agreed, claiming it followed the Supreme Court’s landmark decision in Dirks v. SEC, which drew a line in the sand between illegal insider trading and tipping and other conduct. But the Second Circuit also claims to have faithfully followed Dirks in its seminal Newman decision, which the SEC and prosecutors argue will substantially hinder insider trading enforcement. Although Newman, like Dirks, drew a clear line, the Supreme Court refused to hear that case. Salman did not draw a Dirks-type line. The question is what the High Court might do: might it tell Congress to write a statute rather than having the courts continue to write rules, overrule Dirks, or perhaps create a new approach? The stakes for insider trading enforcement could