The Case That Has The U.S. Supreme Court Considering Insider Trading For The First Time In 20 Years

The U.S. Supreme Court is hearing an insider trading case, Salman v. United States, in which Bassam Salman was convicted of trading on private information he may have received from an extended family member whose brother worked at Citigroup.

Is this consider insider trading?

As noted by Business Insider, Salman never paid the family member for the tip. The government believes Salman acted on insider trading because he was aware of where the tip came from. On the other hand, Salman's lawyer, Alexandra Shapiro, argues that an insider trading allegation involves the tipper receiving a tangible benefit such as cash.

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The U.S. Securities and Exchange Commission defines insider trading as follows: "Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include 'tipping' such information, securities trading by the person 'tipped,' and securities trading by those who misappropriate such information."

There is no mention of compensation to the tipper as a required element to be consider insider trading.

What's most notable is the fact that this is the first time in 20 years the Supreme Court is hearing a case involving insider trading. In fact, insider trading has never been defined by Congress, which leaves the courts and the SEC to shape.

The New York Attorney General's Office has also earned itself a reputation for aggressively pursuing insider trading cases over the past few years.

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