Be Careful Talking to Your Golfing Buddies: It Is Now Undoubtedly Illegal to "Gift" Inside
For a number of years, stock traders and lawyers in the U.S. all believed that the law concerning insider trading was murky at best. No one knew exactly what was or wasn't legal.
On December 6th, 2016, the Supreme Court stated that it easily settled this dilemma.
It was never doubted that a trader who paid cash to an insider for privileged information was engaging in criminal activity and would face prison. BUT, what about the trader who went golfing with his buddies and got a tip from one of them as a gift?
In a unanimous decision, with an opinion by Justice Samuel Alito, Jr., the Supreme Court declared that it is in fact illegal to get insider information as a mere gift. Salman v. United States, No. 15-628 (U.S. Dec. 6, 2016)
For example, the CEO who makes a gift of insider information to his brother-in-law on the back nine, and the brother-in-law himself, remain at rsk for insider trading convictions - even if there wasn't a single penny exchanged.
