Lawyers Weigh In On DOJ’s Newman Appeal to High Court

The U.S. Department of Justice has petitioned the U.S. Supreme Court to overturn its ruling in U.S. v. Newman et al. that raised the bar for prosecuting insider trading cases. Mark S. Olinsky talked about why the appeal is significant.  He stated: “The recent Ninth Circuit decision in Salman — authored by Southern District of New York Judge Jed S. Rakoff sitting by designation and declining to follow the Newman requirement that an insider-tipper have received a pecuniary or other valuable benefit — created an apparent circuit split and put wind in the sails of the Justice Department’s desire to seek Supreme Court review and overturn Newman. The Ninth Circuit essentially held that further evidence is unnecessary for tippee liability when inside information passes among family members or close friends, while the Second Circuit held that evidence of such relationships is not enough. The Newman petition and Salman decision will allow the Supreme Court, if it chooses, to reconsider its opinion in Dirks 30 years ago and provide clarity in what has become a murky area: whether/what kind of a benefit must a tipper receive and does evidence of a family or other close relationship establish sufficient proof?”