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How The Supreme Court & Salman Could Redefine Insider Trading

The United States Supreme Court's decision to hear a case that could have wide-ranging implications for traders on Wall Street and policymakers in Washington DC.

David Miller, partner at Morgan Lewis and former prosecutor in the Southern District of New York, talks with Lee Pacchia about the United States Supreme Court's decision to hear a case that could have wide-ranging implications for traders on Wall Street and policymakers in Washington DC. Miller says that the Court could decide Salman v. United States in a way that would make it much harder for prosecutors to obtain convictions in insider trading cases. Miller also explains how the Salman case could lead to Congress passing new legislation actually defining insider trading, something that currently does not exist. Should Salman prevail at the Supreme Court, Miller sees the entire legal and regulatory framework of insider trading come into question. Salman's case relies on a precise issue; whether it is necessary to demonstrate that the initial tipster in an insider trading case need gain a personal benefit from passing information along to a tipee. Bassam Salman was convicted on September 30, 2013 of insider trading on information passed along from his future brother-in-law, Maher Kara, then working at Citigroup's healthcare investment banking group, and was ultimately sentenced to serve three years in prison and pay $738,539.42 in restitution. At the 9th Circuit, the court overturned Salman's conviction finding that 'the government presented direct evidence that the disclosure [from Kara to Salman] was intended as a gift of market-sensitive information.'

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