The court’s Martoma decision reinvigorates the US government’s ability to prosecute insider trading cases.
Key Points:
- The majority opinion overrules recent case law requiring that an insider have a meaningfully close relationship with a tippee and receive an objective and consequential benefit, while leaving intact the separate requirement that a tippee know of the personal benefit to the insider.
- A vigorous dissent warns of the government’s potentially overbroad application of insider trading authority.
- The decision should serve as a reminder to company insiders and market professionals that any discussion involving confidential company information can lead to a lengthy and intrusive insider trading investigation.
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