An investment banker passes along a tip to his brother about upcoming mergers involving his bank’s clients. The brother slips the tip to his brother-in-law, who uses the information to make more than $1 million from trading he did ahead of the deals. There’s no evidence that the banker received compensation for leaking the information, other than possibly some warm fuzzies for helping a family member make a lot of money. Is their family relationship enough to justify convicting the brother-in-law for insider trading? Or did the banker need to receive something tangible — say, a fancy new car or a duffel bag full of cash — in return?
Today, the Supreme Court is trying to figure out the answer to those questions. The court will hear arguments in Salman v. United States, a case in which Bassam Salman, the brother-in-law in the scenario above, is asking the court to reconsider his conviction on charges of conspiracy and securities fraud. It’s a case that could bring the government’s sweeping crackdown on insider trading — led by federal prosecutors in New York, who have brought charges against more than 100 people since 2009 — to a screeching halt. – READ MORE
