We previously wrote on this blog about an insider trading case currently up on appeal before the Supreme Court. The case involves the issue of whether a personal benefit can be assumed based only on a close relationship between the tipper and the tippee, or whether there must be a tangible monetary benefit for disclosing insider information.
Though no decision in the case has yet been rendered, the man convicted of fraud who is appealing the case recently argued in a brief submitted to the court that upholding the lower court’s ruling that a psychological benefit could suffice as personal gain under the law would effective eliminate the personal benefit requirement.
The heart of the argument made by Bassam Salman, the convicted offender in the appeal, is that permitted conviction based on close personal relationship alone is too flexible a standard and that it allows prosecutors too much discretion in the prosecution of insider trading. It remains to see how that argument is taken by the high court.
The way the issue is handled by the court could have an impact on how insider trading is investigated and prosecuted. That is no small thing given the crackdown on insider trading in recent years. As we’ve said before, previous cases have held that a concrete financial benefit is required, so it really is an issue that needs to be resolved.
We’ll keep readers updated of any developments in the case. In our next post, we’ll look a bit more at the case and the importance of working with an experienced advocate when facing serious criminal charges.