Court Backs Prosecutors Over Family Tips in Insider Trading Cases

WASHINGTON—The Supreme Court on Tuesday cemented the ability of prosecutors to pursue insider trading cases based on tips passed along among friends and family.

The court, in a unanimous opinion by Justice Samuel Alito, affirmed the conviction of a Chicago man for trading on inside tips from relatives.

The ruling rejected arguments by defendant Bassam Salman, who traded on information originally from his brother-in-law who worked as an investment banker at Citigroup Inc. He was convicted in 2013 and sentenced to three years in prison.

Mr. Salman had contended that evidence of a family relationship between the tipper and the tip recipient wasn't enough to support a conviction.

The high court disagreed, saying an earlier 1983 Supreme Court decision easily resolved the case against Mr. Salman.

Justice Alito said the earlier high-court precedent "makes clear that a tipper breaches a fiduciary duty by making a gift of confidential information to a trading relative, and that rule is sufficient to resolve the case at hand."

Write to Brent Kendall at [e-mail] and Aruna Viswanatha at [e-mail]

(END) Dow Jones Newswires

December 06, 2016 11:05 ET (16:05 GMT)

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