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Mind The Gap(S): Solutions For Defining Tipper-Tippee Liability And The Personal Benefit Test Post-Salman V. United States, Matthew Williams

Fordham Journal of Corporate & Financial Law

The Supreme Court’s decision in Salman v. United States reaffirmed (and indeed, clarified) the central holding of Dirks v. SEC that no additional pecuniary or reputational gain is needed when an insider gives information to a “trading relative or friend.” While this was considered a win for prosecutors, the Court chose to abstain from considering more complex questions regarding tipper-tippee liability. Namely, the Court provided no guidance on what constitutes a “friend” or “trading relative” nor how a tippee “should know” whether information was improperly disclosed. Without any clear standards, prosecutors and courts have wide discretion to determine whether these …