Abstract
The Supreme Court decided to consider the meaning of the personal benefit requirement in an insider trading case based on a tipping violation. The personal benefit requirement has been controversial and led to a split in the circuit courts. The Court’s decision on the meaning of a tipper’s personal benefit in Salman v. United States will have substantial consequences for the enforcement of the insider trading laws, but the purpose of this paper is not to recommend how the Court should define personal benefit. Instead, it is to suggest that the Court should apply a rule of construction to the personal benefit element that narrows the scope of potential liability. A narrow interpretation would be appropriate because the tipping violation is a judicially implied claim under Section 10(b) of the Exchange Act and Rule 10b-5, and the Supreme Court’s precedents for the judicially implied private right of action under Section 10(b) have stressed the need for limiting constructions.
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