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The U.S. Supreme Court will hear a case about insider trading for the first time in two decades:
U.S. Supreme Court justices suggested they will make it easier to prosecute Wall Street figures for insider trading as the court heard arguments on the subject for the first time in two decades. Taking up the conviction of onetime Chicago grocery wholesaler Bassam Yacoub Salman, the justices weighed Wednesday whether someone can be sent to prison for making trades when the insider who provided the tip wasn't looking to make any money. A majority of the eight justices indicated a willingness to uphold the conviction.
A victory for the government would be a boost for prosecutors and the Securities and Exchange Commission, restoring some of the leverage they lost in 2014 when a federal appeals court in Manhattan imposed new requirements on government lawyers. The New York court's ruling undercut U.S. Attorney Preet Bharara's eight-year crackdown on Wall Street cheating and led to more than a dozen insider-trading convictions being thrown out. Justice Stephen Breyer said that ruling had changed decades-old rules for insider trading by requiring prosecutors to show that the insider received a concrete benefit. Salman's lawyer is urging the court to adopt that standard nationwide.
Also at Reuters and The New York Times .
(Score: 1) by Francis on Thursday October 06 2016, @01:50PM
They should have both been prosecuted, my guess is that since the brother-in-law didn't execute any trades that they couldn't make a case against him. Whereas the guy they prosecuted was foolish enough to buy shares based upon insider knowledge.
AFAIK, it's a matter of whether or not you've got access to confidential materials not available to the public in order to be prosecuted for this. I don't personally work for MS, but if a friend of mine tipped me off about some significant development that hadn't been announced and I bought shares based upon that, I could expect to be prosecuted if anybody noticed the irregularity.
(Score: 2) by Joe Desertrat on Thursday October 06 2016, @10:20PM
AFAIK, it's a matter of whether or not you've got access to confidential materials not available to the public in order to be prosecuted for this. I don't personally work for MS, but if a friend of mine tipped me off about some significant development that hadn't been announced and I bought shares based upon that, I could expect to be prosecuted if anybody noticed the irregularity.
I'm not so sure this is morally or ethically wrong. How would it be different if a MS employee increased his purchase on the employee stock plan based on knowledge he had of company workings or if he told a friend who then bought some extra shares? There is a grey area, I think the standard for insider trading as criminal should involve whether stock prices were manipulated to increase profit based on the insider knowledge. Had the MS employee leaked false negative information to drive stock prices down before he and his friend purchased their shares, I would consider that criminal insider trading. Just getting a "hot tip", no.
I think the bigger problem is that there is so much volatility in the market, with stock prices being manipulated for those purchasing for the short term rather than for long term investment. That leads to the "this quarter" mentality that is the bane of so many companies these days.