Insider Trading Law Remains Murky After High Court Ruling

Fenwick white collar and regulatory defense practice chair Chris Steskal was quoted in the Law360 article “Insider Trading Law Remains Murky After High Court Ruling​” (subscription required).

Law360 reported on the U.S. Supreme Court’s decision to affirm the U.S. government’s insider trading conviction against Bassam Salman.

Steskal spoke with Law360 about how the ruling affected the Second Circuit’s earlier Newman decision, and how it would resolve the question of whether the government was required to prove that a tipper who discloses inside information received a benefit in order to impose criminal liability on the tippee who traded on the information.

Steskal said that the Newman decision had created a “ripple” in insider trading law by requiring proof that that tipper received a concrete pecuniary benefit, which was largely reversed by the Supreme Court.

Steskal also said knowledge of the insider’s breach has always been an element of insider trading liability in some form or another. He noted that while the knowledge aspect of Newman is significant, it was not a significant break from prior law.

“That’s a real element and a real limitation on the government’s ability to try insider trading cases, but to me that’s not a new limitation.”​