Justices to weigh limits on insider trading cases

The court, in a brief written order, said it would consider an appeal by convicted trader Bassam Salman, who was sentenced to three years in prison for trading on inside information he received through family contacts.

The justices offered no elaboration on their decision to hear the case.

Mr. Salman, citing Newman, argued that evidence of a family relationship between the tipper and the tip recipient wasn’t enough to demonstrate that the insider received a personal benefit.

A San Francisco-based federal appeals court ruled in Salman’s case that wasn’t required, splitting with a New York-based panel that reached the opposite conclusion seven months earlier.

The decision meant the Supreme Court would weigh in on a key question in multiple legal challenges in insider trading cases: What benefits do corporate insiders need to receive for any information they disclose to traders to be illegal? Mr. Salman has been serving his prison sentence since August 2014.

Responding to Salman’s Supreme Court appeal, the Justice Department said there was no reason to take up his case after denying the government’s appeal in October.

The Justice Department had warned that warned that overturning the convictions could hinder the government’s campaign to curb insider trading on Wall Street, a crackdown that has resulted in more than 80 arrests and 70 convictions over several years.

This time the administration urged the Supreme Court not to intervene, aiming to preserve Salman’s conviction and a favorable opinion from the San Francisco court.

Gregory Morvillo, Chiasson’s lawyer, said the Supreme Court may be seeking to clarify what constitutes insider trading amid continuing uncertainty. Regardless of the eventual outcome, the high court’s decision could have far-reaching impact on insider-trading prosecutions.

“Is the Supreme Court really going to sanction the tipping of brothers-in-law?”