If you are sitting at a family dinner and share corporate information with a cousin or uncle, could that be insider trading that results in a criminal conviction? The Supreme Court is considering just that question in the case of Salman v. United States. It involved Maher Kara, a former investment banker at Citigroup who gave info about a health care merger to his older brother Michael. Michael brought and sold stock based on the tips and he passed the tips to his brother in law Bassam. Salman made a profit over $1 million by trading on the confidential info. He was prosecuted for securities fraud, convicted in 2013 and sentenced to 3 years in prison.
Salman appealed to the Supreme Court arguing that Mahar Kara did not receive any money, gifts or other things of value in exchange for the tips. The government opposed this argument vigorously saying that to rule so narrowly would open the door for Wall Street insiders to hand out valuable inside info on corporations. This, they say, would damage the securities markets.
The Supreme Court Justices just heard oral arguments. It is the first insider trading case to be decided by this court in 20 years. Justice Breyer commented: “It could be argued that to help a close family member is like helping yourself. ..”
Jeffrey Newman represents whistleblowers nation wide.