Government Pushes to Expand Insider Trading Liability

Of course, one possibility is that the government has taken an especially aggressive position in the Supreme Court, but would also be elated with a “compromise” that had the effect of undoing the Newman gift/personal benefit analysis, while still leaving intact an interpretation of Dirks that is more faithful to the language in Dirks than the position urged by the government in its brief. The government is well aware that a majority of the Court is more likely to follow the natural reading of its precedent than to expand or narrow that precedent. If either government strategy succeeds—which, of course, might not happen—the stinging defeat the government suffered in Newman will have been undone despite the government’s opposition to granting the petition for cert in Salman. In addition, Senior District Court Judge Rakoff will have accomplished a most remarkable feat: disagreeing with the Second Circuit in a rare appearance as a designated Ninth Circuit judge, thereby creating a circuit court conflict that made it far more likely the Court would accept certiorari, and ultimately being vindicated by the Supreme Court itself.

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