Santa Court

6 December 2016 By Gina Chon Follow @GinaChon

The U.S. Supreme Court has ruled that the government does not always need to prove defendants know tippers benefit from the information they hand over. That reverses an earlier ruling – and gives disheartened prosecutors extra leeway to go after suspected trading miscreants.

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The U.S. Supreme Court, in an opinion issued on Dec. 6, upheld the 2013 insider-trading conviction of Bassam Salman. He made nearly $1.2 million trading on non-public information provided by the brother of a Citigroup banker, who was Salman's brother-in-law. The unanimous decision, which backed a Ninth Circuit Appeals Court ruling, was the top court's first ruling on an insider-trading case in 20 years.

The decision makes it easier for prosecutors to bring such cases, as the court ruled that they don't have to prove that a tipper received a tangible, quid-pro-quo benefit for the inside information when they are a relative or a friend. "In these situations, the tipper personally benefits because giving a gift of trading information to a trading relative is the same thing as trading by the tipper followed by a gift of the proceeds," the court said in the opinion written by Justice Samuel Alito.

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