Salman v. United States (15-628)
argument 15-628Salman v. United States
Supreme Court of the United States
1h 7m
5 speakers
8 chapters
transcribed 7 days ago
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What constitutional concerns does the Salman v. United States case raise about vague criminal statutes?
We'll hear argument first this morning in case fifteen six twenty eight, Salman versus United States. Mr. Piro.
Mr Chief Justice, and may it please the court. In case after case, McNally Skilling and MacDonald, to name just a few. This court has construed federal criminal statutes narrowly. To avoid serious separation of powers and vagueness problems. This case presents those same constitutional concerns But to a far greater degree, because no statute defines the elements of the crime. The Court should limit this crime to its core, as it did in Skilling. And that core is the insider's abuse of confidential corporate information for personal profit. Unless and until Congress enacts a definition The crime should be limited to trading by the insider or its functional equip equivalent. where the insider tips another person in exchange for a financial benefit.
Suppose in this case The person with the infi inside information, the brother with the inside information. Had himself Trading. and the securities. And then gave the proceeds. to his what was it, his older brother. Would that have violated?
Yes, Your Honor.
So what's the difference? If the insider trades and gives it makes the proceeds a gift. Or if he just says You do the trade. He's the kid.
The difference, Your Honor, is that the transaction the securities transaction is complete when the insider trades and this is a statute. that doesn't even mention insider trading, much less tipping or personal benefit. And so in that instance it wouldn't be covered. Um and he can do whatever he wants with the money.
If we Justice Skinsburg was just Setting up. The the the the question isn't he he is standard uh in in in her instance Where the Tippe does the trading. The Tipeee is just an accomplice. This is standard accomplice stuff.
Well no, Your Honour. Um this The statute this is a case where we have to take a step back and look at the fact that the statute doesn't define the elements, it doesn't even mention insider trading, much less tipping. And um the uh The the the whereas um Dirk's And uh Ciarello before it made clear that Uh not all trading on inside information is unlawful and what makes it unlawful is that the insider is uh doing it for personal gain, whether trading himself and profiting on the information by doing so, or whether It's by circumventing that rule, uh, as discussed in Dirk's and essentially giving uh the information to someone else so that he can get a financial kickback. That's the one.
Maybe one of us is missing the import of the question. Are you suggesting that if Uh uh Two people get together. One of them has inside information. And he says to the other person Why don't the two of us Why don't you trade on that and then you and I will split the proceeds? That that's not covered?
That is covered, Your Honor.
Oh, okay.
I am sorry.
did not act for any financial gain, did not make any money at all. Don't that's what's not covered.
That his brother's statement when he was asked about trading. uh by Meyer, the the younger brother. He said, I owe somebody money. Isn't that most naturally read to be Either give me the money to pay this person back or give me information that lets me pay him back. Isn't that always the quid pro quo of a gift? That you believe that if you give someone a gift It's going to cost you one way or another. You're going to give them something of value. Or you're going to substitute money for the gift, or you're going to do something That saves you. money. by giving the tip.
Well, Your Honor. I think the problem with that is that virtually anything would any disclosure would then amount to a gift and this court has been crystal clear that uh that not any disclosure leads to a violation of the
true but then comes the government suggestion. that the disclosure has to be for a per personal benefit or a personal purpose. There has to be a reason you're doing it. Not accidentally, not Um not unknowingly. But something you're doing because you want to receive some benefit from it.
Well in this case it's quite clear that Maher didn't the the insider uh brother didn't receive any benefit at all, and indeed the district court and the SEC
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Chapters
8 chapters
1
What constitutional concerns does the Salman v. United States case raise about vague criminal statutes?
0:00–6:13
2
How does the argument illustrate the difference between insider trading and gifting confidential information?
6:13–13:58
3
What is the “personal benefit” test and how is it applied to insider tips in this case?
13:58–20:34
4
How do the courts interpret Dirks and related precedents to define liability for tippees?
20:34–29:16
5
Why does the government argue for a broader definition of insider trading under Section 10(b)?
29:16–37:00
6
What role do knowledge, intent, and conscious avoidance play in establishing a breach of fiduciary duty?
37:00–44:18
7
How do relationships—family, friends, or acquaintances—affect the application of insider‑trading laws?
44:18–51:22
8
What are the implications of the Court’s decision for future legislation and market integrity?
51:22–1:00:46