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The Supreme Court of the United States just expanded what it means to commit white collar crime by using insider information to make money. While this ruling will impact what business executives talk about, it also has the potential to impact the lives of regular people, as well.
The case dealt with two brothers and a brother-in-law. Maher Kara was an investment banker at Citigroup, giving him access to insider information on companies in the healthcare field. Maher started sharing insider information with his brother Michael, allowing Michael to make better investments. Michael, unbeknownst to Maher, was also passing this information along to their brother-in-law, Salman, who also used it to make investments. Salman ended up making $1.5 million in profits on the insider information.
When law enforcement caught on, both Maher and Michael plead guilty. The white collar crime charges against Salman, however, went to trial.
After being convicted, Salman appealed and his case wound its way all the way to the Supreme Court. There, however, the Court ignored the elephant in the room – the distance between insider, Maher, and the person being charged, Salman.
The Federal Securities Law that Salman was being charged for required that people who provided insider trading tips must receive some sort of benefit in return, and that people who received the tips not use them for trading.
In deciding that Salman violated the law, however, the Supreme Court focused on the first issue, and looked past significant problems in the second. This made the case simple: “Giving a gift of trading information to a trading relative is the same thing as trading by the tipper followed by a gift of the proceeds.” The tip went from an insider to a brother-in-law, making it illegal insider trading.
The problem that the court overlooks is the fact that Michael relayed the information between investment insider Maher and Salman, who was being charged. Technically, Salman wasn’t getting information from the insider, at all – it was coming to him, second-hand. For all Salman knew, Michael could have been lying when he said that the information was coming from Maher at the bank.
While this seems like a problem that only rich people could have, the Supreme Court’s decision opens up the potential for people even further down the line from being convicted for insider trading. If a distant cousin of yours works on Wall Street and gives insider information to his sister-in-law, who then passes it to an uncle, who then tells his grandson, who then tells you, you might be violating the law if you act on it.
Expansions of the law like the one that the Supreme Court just committed can be dangerous. It creates a slippery slope that has the potential to indict other, innocent, people.
If you are facing criminal charges in Maine, the attorneys at The Maine Criminal Defense Group are here to help. Call our office to speak with
one of our team members, who will discuss your case with you and set up a consultation with one of our attorneys
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