Securities Law Prof Blog

SEC Issues Annual Staff Reports on Credit Rating Agencies

Details available here.

G. Jeffrey Boujoukos Named Director of Philadelphia Regional Office

Details available here.

Sharon Binger, Director of Philadelphia Regional Office, to Leave SEC

Details available here.

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Jeffrey M. Colon, Foreign Investors in U.S. Mutual Funds: The Trouble with Treaties, 35 Va. Tax Rev. 483 (2016).

Katherine Drummonds, Note, Resuscitating Dirks: How the Salman "Gift Theory" of Tipper-Tippee Personal Benefit Would Improve Insider Trading Law, 53 Am. Crim. L. Rev. 833 (2016).

Eithan Y. Kidron, Systemic Forum Selection Ambiguity in Financial Regulation Enforcement, 53 Am. Crim. L. Rev. 693 (2016).

Enforcement Director Andrew J. Ceresney to Leave SEC

Details available here.

SEC Names Dr. Narahari Phatak Associate Director for Policy in the Division of Economic and Risk Analysis

Details available here.

New in Print

The following law review article relating to securities regulation is now available in paper format:

John P. Anderson, Anticipating a Sea Change for Insider Trading Law: From Trading Plan Crisis to Rational Reform, 2015 Utah L. Rev. 339.

Division of Corporation Finance Director Keith Higgins to Leave SEC

Details available here.

NASAA Request for Public Comment Regarding a Proposed Model Statute, a Proposed Model Rule, and a Proposed Solicitation of Interest Form to Permit Testing The Waters in Regulation A Tier 1 Offerings

Details available here.

Podgor on Salman

Ellen Podgor from the White Collar Crime Prof Blog also has an interesting post about Salman.  She offers her thoughts about the rule of lenity concerns that may be created in other cases by the limited analysis offered by the Court in the Salman opinion.

Heminway on Salman

Joan MacLeod Heminway has some nice analysis of Salman over at the Business Law Prof Blog.  Her post is worth checking out.

Salman v. United States: A Few Observations

In Salman v. United States, the Supreme Court revisits the question of tippee liability for insider trading, a topic which the Court has not addressed since Dirks v. SEC, 463 U. S. 646 (1983).  Salman was convicted of insider trading based upon receiving material, non-public information as a gift through his brother-in-law who had received the information as a gift from his own brother.  Continuing the tradition of the Roberts Court when hearing issues of securities regulation, the unanimous majority in a opinion authored by Justice Alito ruled to maintain the status quo.  The Dirks test is noted on page 2 of the slip opinion: "The tippee acquires the tipper’s duty to disclose or abstain from trading if the tippee knows the information was disclosed in breach of the tipper’s duty."  To determine the existence of a breach of fiduciary duty, "the disclosure of confidential information without personal benefit is not enough."   To establish the existence of a "personal benefit," the Court held that the tipper receives a personal benefit either when the tipper receives a financial benefit or when giving a gift of information to a trading relative or friend because "giving a gift of trading information is the same thing as trading by the tipper followed by a gift of the proceeds."  As Justice Alito writes on page 11 of the opinion, "Salman’s conduct is in the heartland of Dirks’s rule concerning gifts."  As a result, Salman's conviction was affirmed.

Beyond standing as a reaffirmation of Dirks with minor clarification, Salman also stands for the proposition that if securities regulation is to evolve, such evolution will have to come from Congressional action, rather than from the Court.  Because the opinion was unanimous, the confirmation of Judge Merrick Garland to the Court would have made little difference in the case, and it is unlikely that Donald Trump will appoint an activist justice in this area.  As a result, we will likely be left with stale remakes of previous opinions for the foreseeable future, unless Congress decides to refresh and reinvent the existing regulation.

SCOTUS Issues Salman

The opinion is available here.

Macey on Insider Trading

Jonathan R. Macey has posted Beyond the Personal Benefit Test: The Economics of Tipping by Insiders on SSRN with the following abstract:

Recent insider trading cases reveal a stark conceptual divided between the federal courts and the Securities and Exchange Commission (SEC) regarding liability for securities fraud in cases in which an insider (a "tipper") gives material non-public information to a market professional or close friend or other potential trader (a "tippee"). Following a landmark Supreme Court case called Dirks v. SEC, the federal courts do not impose liability on tippers or tippees unless there the tipper receives a consequential personal benefit or is a close friend or relative of the tippee. The SEC abjures this "personal benefit" requirement, and would define the concept of personal benefit so broadly as to remove it as an impediment to insider trading prosecutions. This Article explains the economic function of the personal benefit test as establishing the criterion upon which legitimate trading on the basis of material nonpublic information can be distinguished from venal or corrupt trading. The Article shows that the personal benefit test, while a valuable innovation to insider trading jurisprudence, is severely limited because it does not capture all of the various motivations that cause insiders to convey material nonpublic information to traders. This Article fills that gap by providing a complete taxonomy of tipping and trading, and explaining what the legal consequences of all of the various forms of insider trading.

Chief Economist and Division of Economic and Risk Analysis Director Mark Flannery to Leave SEC

Details available here.

SEC Advisory Committee on Small and Emerging Companies to Hold Conference Call Meeting on December 7

Details available here.

SEC Votes to Renew Equity Market Structure Advisory Committee

Details available here.