The U.S. Supreme Court on Jan. 19 agreed to hear an appeal regarding insider trading, which has been a divisive issue in several federal appeals courts for months.
The case, coming from California, involves trading by a man named Bassam Salman. Salman made his purchases after receiving information from his future brother-in-law, Maher Kara, who was then part of Citigroup’s healthcare investment banking group.
Prosecutors are now trying to prove in the case, Salman v. United States, No. 15-628, that Kara passed on sensitive information to Salman in exchange for a personal benefit and that Salman is guilty of insider trading.
New York Times and Wall Street Journal reported, the case brings up a complicated issue which could propel the legislative iron hand upon Wall Street’s insider-trading circles: How will the government prove and prosecute a case involving family members and friends passing on confidential trading tips? Can it even prove that insider trading occurred at all?
The debate certainly isn’t a new one; of the 80 individuals charged with insider-trading in 2014, more than a few had cases involving close family or friends.
Depending on how the Supreme Court justices rule in the Salman v. U.S. case, it could become easier — or harder — for prosecutors to eradicate corruption on Wall Street.
The Supreme Court briefly announced that it would consider an appeal by Salman, who was convicted in 2013 and sentenced to three years in prison for trading stocks on inside information, according to USA Today. Salman and an associate bought $1.7 million in trading profits after Kara passed on information of Citigroup’s incoming client acquisitions.
Salman’s legal team had tried to use the ruling of a similar case, U.S. v. Newman, in Salman’s defense. In that case, an appeals panel ruled that prosecutors had to prove that there was an exchange of something valuable in return for inside trading tips when two close family members or friends were involved.
San Francisco’s Ninth U.S. Circuit Court of Appeals rejected this defense for Salman’s case in July 2015, and the case is now headed to the Supreme Court.
Salman, who has been serving his sentence since Aug. 2014, still remains in prison.