Michael Guttentag (Loyola-LA) is one of my favorite corporate law scholars--smart, thoughtful, meticulous. He's got an on point analysis of the recent Salman insider trading/tipping decision up at CLS blog:
The Salman opinion is, however, most notable for how studiously the Court avoids addressing issues related to insider trading law more generally. There are only two footnotes in the opinion, and both are dedicated to clarifying the extent to which it does not address other related topics. Similarly, the opinion uses one paragraph to summarize the Government’s argument that the test for tipper liability should be whether a tip was made for a “noncorporate purpose,” without the additional requirement that the tipper receive a personal benefit. The rest of the opinion ignores the Government’s proposal without explanation.
Another example of this minimalist approach is the Court’s explanation of why it chooses to continue to rely on the Dirks personal benefit test to determine whether there was wrongdoing by the tipper. What little explanation is provided is problematic. The justices cite Dirks for the proposition that a prohibition against insider trading needs to include tipping, “because giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds.” But this rationale suggests that any gift of material nonpublic information should trigger insider trading liability, and Dirks prohibits only gifts to “a trading relative or friend.” That seems a significant gap in the logic of Dirks, as some commentators have noted.[1] Yet there is no mention of this disconnect in the Salman opinion.
Go read the whole thing. For my take on Salman, see US Supreme Court’s ‘Salman v. US’ Decision Answers One Insider-Trading Question, Leaves Others Unresolved
