From: Richard Kahn To: "Jeffrey E." <[email protected]> Subject: Fwd: Supreme Court Rejects Newman Requirement Date: Thu, 08 Dec 2016 15:22:11 +0000 ; AL :L AI L :L AI L :L e: ; t: SECURITIES LITIGATION ALERT DECEMBER 7, 2016 Supreme Court Rejects Newman Requirement of "Pecuniary or Similarly Valuable" Personal Benefit for Insider Trading Liability for Tipping Family and Friends For further information about this Alert, please contact: Sam Lieberman Partner 212.571.8164 Please feel free to discuss any aspect of this Alert with your regular Sadis & Goldberg contact or with any of the partners whose names and contact information can be found at the end of the Alert. The U.S. Supreme Court gave the government a major victory in Selman I/. U.S.,[1] which lowers the standard for proving insider trading involving tipping family or friends, and will embolden the government to bring similar cases. Selman holds that a gift of inside information to a family or friend is sufficient to prove insider trading tipping liability - even if the tipper did not receive a valuable quid pro quo in exchange for the tip. This significantly narrows U.S. v. Newman, in which the Second Circuit (a lower appellate court) held that a tipper must receive "at least a potential gain of a pecuniary or similarly valuable nature," as a personal benefit necessary to be held liable for insider tradIng.[2] Selman will almost certainly embolden the SEC and federal prosecutors to bring more insider trading cases, because it is much easier for the government to prove a 'gift" to a "friend" than to prove a "pecuniary" or similar quid pro quo. In Selman, an investment banker at Citigroup tipped his Brother about certain pending healthcare mergers involving Citigroup clients. The Brother traded on that information for a profit, and also tipped his Brother-in-Law, Mr. Salman, who also traded for a profit. At trial, the government relied solely on the tippers giving a gi