Insider Trading And Remote Tippees

It is by now old news that the United States Supreme Court recently upheld a tipping conviction in Salman v. United States. The case turned on the issue of personal benefit, introduced in the seminal 1983 Supreme Court case of Dirks v. SEC, 463 U.S. 646 (1983). In a widely discussed forerunner to Salman handed down in 2014, U.S. v. Newman, 773 F. 3d 438 (2d Cir. 2014), the Second Circuit overturned the conviction of remote tippees, in part on the basis that the government had not demonstrated that the initial tippers received a personal benefit. In addition to finding no personal benefit, however, the Second Circuit in Newman also reversed "because the Government introduced no evidence that the defendants knew that the information they traded on came from insiders or that the insiders received a personal benefit in exchange for the tips." The Supreme Court in Salman expressly left this ruling from Newman – which has significant consequences for professional market