Cooper, James 10/28/2016 For Educational Use Only

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    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 1
    KeyCite Yellow Flag - Negative Treatment
    Certiorari Granted in Part by Salman v. U.S., U.S., January 19, 2016
    792 F.3d 1087
    United States Court of Appeals,
    Ninth Circuit.
    UNITED STATES of America, Plaintiff–Appellee,
    v.
    Bassam Yacoub SALMAN, aka Bessam
    Jacob Salman, Defendant–Appellant.
    No. 14–10204.
    |
    Argued and Submitted June 9, 2015.
    |
    Filed July 6, 2015.
    Synopsis
    Background: Defendant was convicted in the United
    States District Court for the Northern District of
    California, Edward M. Chen, J., of conspiracy and insider
    trading. Defendant appealed.
    [Holding:] The Court of Appeals, Rakoff, Senior District
    Judge, held that evidence was sufficient to support finding
    tipper received personal benefit in exchange for disclosure
    as required to support conviction.
    Affirmed.
    West Headnotes (4)
    [1] Criminal Law
    Points and authorities
    Court of Appeals will not ordinarily consider
    matters on appeal that are not specifically and
    distinctly argued in appellant's opening brief.
    Cases that cite this headnote
    [2] Criminal Law
    Points and authorities
    Court of Appeals may consider an argument
    on appeal not raised in an opening brief: (1)
    for good cause shown or if a failure to do so
    would result in manifest injustice, (2) when it is
    raised in the appellee's brief, or (3) if the failure
    to raise the issue properly did not prejudice the
    defense of the opposing party.
    Cases that cite this headnote
    [3] Criminal Law
    Construction in favor of government,
    state, or prosecution
    Criminal Law
    Reasonable doubt
    In reviewing a challenge to the sufficiency of
    the evidence to support a criminal conviction,
    Court of Appeals must determine whether,
    when viewed in the light most favorable to
    the Government, the evidence was adequate
    to allow any rational trier of fact to find
    the essential elements of the crime beyond a
    reasonable doubt.
    Cases that cite this headnote
    [4] Securities Regulation
    Tippees
    Evidence was sufficient to support finding
    that defendant, as close friend and family
    member of corporate insider, must have
    known that when insider gave material nonpublic
    information to his brother, defendant's
    tipper, he did so in breach of his fiduciary
    duty with intent to benefit a close relative such
    that he received a personal benefit in exchange
    for his tips, as required to sustain defendant's
    conviction for insider trading; defendant, as
    brother-in-law of insider, knew of insider and
    tipper's close familial relationship as fraternal
    brothers and was told by tipper that it was
    his brother who repeatedly leaked inside
    information on which defendant traded,
    insider testified he disclosed confidential
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2
    information to benefit and fulfill the needs
    of his brother, the tipper, and defendant and
    tipper agreed they had to protect insider
    from exposure. 18 U.S.C.A. § 371; Securities
    Exchange Act of 1934, §§ 10(b), 32, 15
    U.S.C.A. §§ 78j(b), 78ff; 17 C.F.R. § 240.10b–
    5.
    7 Cases that cite this headnote
    Attorneys and Law Firms
    *1088 John D. Cline (argued), Law Office of John D.
    Cline, San Francisco, CA, for Defendant–Appellant.
    Merry Jean Chan, Assistant United States Attorney
    (argued), Melinda Haag, United States Attorney, Barbara
    J. Valliere, Chief, Appellate Division, United States
    Attorney's Office, San Francisco, CA, for Plaintiff–
    Appellee.
    Appeal from the United States District Court for the
    Northern District of California, Edward M. Chen,
    District Judge, Presiding. D.C. No. 3:11–CR–00625–
    EMC–1.
    Before: MORGAN CHRISTEN and PAUL J.
    WATFORD, Circuit Judges, and JED S. RAKOFF,
    Senior District Judge. *
    OPINION
    RAKOFF, Senior District Judge:
    Defendant–Appellant Bassam Yacoub Salman appeals
    his conviction, following jury trial, for conspiracy
    and insider trading. He argues that the evidence was
    insufficient to sustain his conviction under the standard
    announced by the United States Court of Appeals for the
    Second Circuit in United States v. Newman, 773 F.3d 438
    (2d Cir.2014), which he urges us to adopt. We find that the
    evidence was sufficient, and we affirm. 1
    BACKGROUND
    This case arises from an insider-trading scheme involving
    members of Salman's extended family. On September 1,
    2011, Salman was indicted for one count of conspiracy to
    commit securities fraud in violation of 18 U.S.C. § 371 and
    four counts of securities fraud in violation of 15 U.S.C. §§
    78j(b) and 78ff, 17 C.F.R. §§ 240.10b–5, 240.10b5–1 and
    240.10b5–2, and 18 U.S.C. § 2. At trial, the Government
    presented evidence of the following:
    In 2002, Salman's future brother-in-law Maher Kara
    joined Citigroup's healthcare investment banking group.
    Over the next *1089 few years, Maher began to
    discuss aspects of his job with his older brother, Mounir
    (“Michael”) Kara. At first, Maher sought help from
    Michael, who held an undergraduate degree in chemistry,
    in understanding scientific concepts relevant to his work
    in the healthcare and biotechnology sectors. In 2004, when
    their father was dying of cancer, the focus of the brothers'
    discussions shifted to companies that were active in the
    areas of oncology and pain management. Maher began
    to suspect that Michael was trading on the information
    they discussed, although Michael initially denied it. As
    time wore on, Michael became more brazen and more
    persistent in his requests for inside information, and
    Maher knowingly obliged. From late 2004 through early
    2007, Maher regularly disclosed to Michael information
    about upcoming mergers and acquisitions of and by
    Citigroup clients.
    Meanwhile, in 2003, Maher Kara became engaged to
    Salman's sister, Saswan (“Suzie”) Salman. Over the course
    of the engagement, the Kara family and the Salman
    family grew close. In particular, Salman and Michael Kara
    became fast friends. In the fall of 2004, Michael began
    to share with Salman the inside information that he had
    learned from Maher, encouraging Salman to “mirrorimag
    [e]” his trading activity. Rather than trade through
    his own brokerage account, however, Salman arranged
    to deposit money, via a series of transfers through other
    accounts, into a brokerage account held jointly in the
    name of his wife's sister and her husband, Karim Bayyouk.
    Salman then shared the inside information with Bayyouk
    and the two split the profits from Bayyouk's trading.
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3
    The brokerage records introduced at trial revealed that,
    on numerous occasions from 2004 to 2007, Bayyouk
    and Michael Kara executed nearly identical trades in
    securities issued by Citigroup clients shortly before the
    announcement of major transactions. As a result of
    these trades, Salman and Bayyouk's account grew from
    $396,000 to approximately $2.1 million.
    Of particular relevance here, the Government presented
    evidence that Salman knew full well that Maher Kara
    was the source of the information. Michael Kara (who
    pled guilty and testified for the Government) testified that,
    early in the scheme, Salman asked where the information
    was coming from, and Michael told him, directly, that
    it came from Maher. Michael further testified about an
    incident that occurred around the time of Maher and
    Suzie's wedding in 2005. According to Michael Kara, on
    that visit, Michael noticed that there were many papers
    relating to their stock trading strewn about Salman's
    office. Michael became angry and admonished Salman
    that he had to be careful with the information because it
    was coming from Maher. Michael testified that Salman
    agreed that they had to “protect” Maher and promised to
    shred all of the papers.
    The Government further presented evidence that Maher
    and Michael Kara enjoyed a close and mutually beneficial
    relationship. Specifically, the jury heard testimony that
    Michael helped pay for Maher's college, that he stood
    in for their deceased father at Maher's wedding, and, as
    discussed above, that Michael coached Maher in basic
    science to help him succeed at his job. Maher, for his
    part, testified that he “love[d] [his] brother very much”
    and that he gave Michael the inside information in order
    to “benefit him” and to “fulfill [ ] whatever needs he
    had.” For example, Maher testified that on one occasion,
    he received a call from Michael asking for a “favor,”
    requesting “information,” and explaining that he “owe[d]
    somebody.” After Michael turned down Maher's offer
    of money, Maher gave him a tip about an upcoming
    acquisition instead.
    *1090 Finally, the Government presented evidence that
    Salman was aware of the Kara brothers' close fraternal
    relationship. The Salmans and the Karas were tightly knit
    families, and Salman would have had ample opportunity
    to observe Michael and Maher's interactions at their
    regular family gatherings. For example, Michael gave a
    toast at Maher's wedding, which Salman attended, in
    which Michael described how he spoke to his younger
    brother nearly every day and described Maher as his
    “mentor,” his “private counsel,” and “one of the most
    generous human beings he knows.” Maher, overcome
    with emotion, began to weep.
    The jury found Salman guilty on all five counts. Salman
    then moved for a new trial pursuant to Rule 33 of the
    Federal Rules of Criminal Procedure, on the ground, inter
    alia, that there was no evidence that he knew that the
    tipper disclosed confidential information in exchange for
    a personal benefit. The district court denied his motion in
    full.
    Salman timely appealed, but did not raise a challenge
    to the sufficiency of the evidence in his opening brief.
    After he filed his reply brief, the United States Court
    of Appeals for the Second Circuit, in United States v.
    Newman, 773 F.3d 438 (2d Cir.2014), vacated the insidertrading
    convictions of two individuals on the ground
    that the Government failed to present sufficient evidence
    that they knew the information they received had been
    disclosed in breach of a fiduciary duty. Id. at 455. After
    the Second Circuit denied the Government's petition for
    panel rehearing and rehearing en banc, United States v.
    Newman, Nos. 13–1837, 13–1917, 2015 WL 1954058 (2d
    Cir. Apr. 3, 2015), Salman promptly moved for leave to
    file a supplemental brief arguing that the Government's
    evidence in the instant case was insufficient under the
    standard announced in Newman, which he urged this
    Court to adopt. We granted Salman's motion and gave the
    Government an opportunity to respond.
    DISCUSSION
    A.
    [1] [2] The threshold question is whether Salman waived
    the present argument by failing to raise it in his opening
    brief on this appeal, even though he had raised it below
    and, after Newman was decided, promptly raised it in
    a supplemental brief that the Government responded to
    before oral argument. Ordinarily, we will not consider “
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4
    ‘matters on appeal that are not specifically and distinctly
    argued in appellant's opening brief.’ ” United States v.
    Ullah, 976 F.2d 509, 514 (9th Cir.1992) (quoting Miller v.
    Fairchild Indus., Inc., 797 F.2d 727, 738 (9th Cir.1986)).
    However, we make an exception to this general rule (1) for
    “good cause shown” or “if a failure to do so would result in
    manifest injustice,” (2) “when it is raised in the appellee's
    brief,” or (3) “if the failure to raise the issue properly
    did not prejudice the defense of the opposing party.” Id.
    (internal citation and quotation marks omitted).
    The third exception applies here. As both parties have
    had a full opportunity to brief this issue and to address
    it at oral argument, the Government cannot complain
    of prejudice. See Hall v. City of Los Angeles, 697 F.3d
    1059, 1072 (9th Cir.2012) (finding no prejudice where
    parties had opportunity to brief the issue); Ibarra–Flores
    v. Gonzales, 439 F.3d 614, 619 n. 4 (9th Cir.2006)
    (considering issue not raised in opening brief where
    opponent had an opportunity to address the issue at oral
    argument). Accordingly, we address Salman's claim on the
    merits.
    *1091 B.
    [3] In reviewing a challenge to the sufficiency of the
    evidence, we must determine whether, when viewed in
    the light most favorable to the Government, the evidence
    was “ ‘adequate to allow any rational trier of fact to find
    the essential elements of the crime beyond a reasonable
    doubt.’ ” United States v. Richter, 782 F.3d 498, 501 (9th
    Cir.2015) (quoting United States v. Nevils, 598 F.3d 1158,
    1164 (9th Cir.2010) (en banc)). Salman urges us to adopt
    Newman as the law of this Circuit, and contends that,
    under Newman, the evidence was insufficient to find either
    that Maher Kara disclosed the information to Michael
    Kara in exchange for a personal benefit, or, if he did, that
    Salman knew of such benefit. 2
    The “personal benefit” requirement for tippee liability
    derives from the Supreme Court's opinion in Dirks v.
    S.E.C., 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911
    (1983). Dirks presented an unusual fact pattern. Ronald
    Secrist, a whistleblower at a company called Equity
    Funding, had contacted Raymond Dirks, a well-known
    securities analyst, after Secrist's prior disclosures to the
    Securities and Exchange Commission (“SEC”) had gone
    for naught. Id. at 649 & 650 n. 3, 103 S.Ct. 3255. Secrist,
    for no other purpose than exposing the Equity Funding
    fraud, disclosed inside information about the company to
    Dirks, who in turn launched his own investigation that
    eventually led to public exposure of a massive fraud. Id.
    at 649–50, 103 S.Ct. 3255. However, in the process of
    his investigation, Dirks openly discussed the information
    provided by Secrist with various clients and investors,
    some of whom then sold their Equity Funding stock on the
    basis of that information. Id. at 649, 103 S.Ct. 3255. Upon
    learning this, the SEC charged Dirks with securities fraud,
    and this position was upheld by an SEC Administrative
    Law Judge and affirmed by the District of Columbia
    Circuit, after which certiorari was granted. Id. at 650–52,
    103 S.Ct. 3255. 3
    When the case came to the Supreme Court, Justice
    Powell, writing for the Court, began by noting that,
    whistleblowing quite aside, corporate insiders, in the
    many conversations they typically have with stock
    analysts, often accidentally or mistakenly disclose
    material information that is not immediately available to
    the public. Id. at 658–59, 103 S.Ct. 3255. Thus, “[i]mposing
    a duty to disclose or abstain solely because a person
    knowingly receives material nonpublic information from
    an insider and trades on it could have an inhibiting
    influence on the role of market analysts, which the SEC
    itself recognizes is necessary to the preservation of a
    healthy market.” Id. at 658, 103 S.Ct. 3255. At the same
    time, the Court continued, “[t]he need for a ban on some
    tippee trading is clear. Not only are insiders forbidden
    by their fiduciary relationship from personally using
    undisclosed corporate information to their advantage, but
    they may not give such information to an outsider for the
    same improper purpose of exploiting the information for
    their personal gain.” Id. at 659, 103 S.Ct. 3255.
    *1092 “Thus, the test is whether the insider personally
    will benefit, directly or indirectly, from his disclosure,”
    id. at 662, 103 S.Ct. 3255, for in that case the
    insider is breaching his fiduciary duty to the company's
    shareholders not to exploit company information for his
    personal benefit. 4 And a tippee is equally liable if “the
    tippee knows or should know that there has been [such]
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 5
    a breach,” id. at 660, 103 S.Ct. 3255, i.e., knows of the
    personal benefit.
    Of particular importance here, the Court then went on
    to define what constitutes the “personal benefit” that
    constitutes the breach of fiduciary duty. It would include,
    for example, “a pecuniary gain or a reputational benefit
    that will translate into future earnings.” Id. at 663, 103
    S.Ct. 3255. However, “[t]he elements of fiduciary duty and
    exploitation of nonpublic information also exist when an
    insider makes a gift of confidential information to a trading
    relative or friend.” Id. at 664, 103 S.Ct. 3255 (emphasis
    supplied).
    The last-quoted holding of Dirks governs this case.
    Maher's disclosure of confidential information to
    Michael, knowing that he intended to trade on it,
    was precisely the “gift of confidential information to a
    trading relative” that Dirks envisioned. Id. Indeed, Maher
    himself testified that, by providing Michael with inside
    information, he intended to “benefit” his brother and
    to “fulfill[ ] whatever needs he had.” As to Salman's
    knowledge, Michael Kara, whose testimony we must
    credit on a challenge to the sufficiency of the evidence,
    testified that he directly told Salman that it was Michael's
    brother Maher who was, repeatedly, leaking the inside
    information that Michael then conveyed to Salman, and
    that Salman later agreed that they had to “protect”
    Maher from exposure. Given the Kara brothers' close
    relationship, Salman could readily have inferred Maher's
    intent to benefit Michael. Thus, there can be no question
    that, under Dirks, the evidence was sufficient for the jury
    to find that Maher disclosed the information in breach of
    his fiduciary duties and that Salman knew as much.
    Salman, however, argues that the Second Circuit in
    Newman interpreted Dirks to require more than this. Of
    course, Newman is not binding on us, and our own reading
    of Dirks is guided by the clearly applicable language
    italicized above. But we would not lightly ignore the most
    recent ruling of our sister circuit in an area of law that it
    has frequently encountered.
    The defendants in Newman, Todd Newman and Anthony
    Chiasson, both portfolio managers, were charged with
    trading on material non-public information regarding
    two companies, Dell and NVIDIA, obtained by a group
    of analysts at various hedge funds and investment
    firms. Newman, 773 F.3d at 442–43. The information
    came to them via two distinct tipping chains. The Dell
    tipping chain originated with Rob Ray, a member of
    Dell's investor relations department. Id. at 443. Ray
    tipped information regarding Dell's earnings numbers to
    Sandy Goyal, an analyst. Id. Goyal, in turn, relayed
    the information to Jesse Tortora, another analyst, who
    relayed it to his manager, Newman, as well as to other
    analysts including Spyridon Adondakis, who passed it
    to Chiasson. Id. The NVIDIA tipping chain began
    with Chris Choi, of NVIDIA's finance unit, who tipped
    inside information to his acquaintance Hyung Lim, who
    passed it to Danny Kuo, an analyst, who circulated
    it to his analyst friends, including Tortora and *1093
    Adondakis, who in turn gave it to Newman and Chiasson.
    Id. Having received this information, Newman and
    Chiasson executed trades in both Dell and NVIDIA stock,
    generating lavish profits for their respective funds. Id.
    The Government presented the following evidence
    regarding the relationships between the Dell and NVIDIA
    insiders and their respective tippees. The Dell tipper and
    tippee, Ray and Goyal, attended business school together
    and had been colleagues at Dell, but were not “close.”
    Id. at 452. Goyal provided career advice and assistance to
    Ray, for example, discussing the qualifying examination
    required to become an analyst and editing his résumé.
    Id. This advice began before Ray started to give Goyal
    information, and Goyal testified that he would have given
    it as a routine professional courtesy without receiving
    anything in return. Id. As to the NVIDIA tips, the insider,
    Choi, and his tippee, Lim, were “family friends” who
    met through church and occasionally socialized with one
    another. Id. Lim testified that he did not provide anything
    of value to Choi in return for the tips, and that Choi did
    not know that he was trading in NVIDIA stock. Id.
    The Second Circuit held that this evidence was insufficient
    to establish that either Ray or Choi received a personal
    benefit in exchange for the tip. It noted that, although
    the “personal benefit” standard is “permissive,” it “does
    not suggest that the Government may prove the receipt
    of a personal benefit by the mere fact of a friendship,
    particularly of a casual or social nature.” Id. Instead, to
    the extent that “a personal benefit may be inferred from
    a personal relationship between the tipper and tippee, ...
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6
    such an inference is impermissible in the absence of
    proof of a meaningfully close personal relationship that
    generates an exchange that is objective, consequential,
    and represents at least a potential gain of a pecuniary or
    similarly valuable nature.” Id. (emphasis supplied).
    Applying these standards, the court concluded that the
    “circumstantial evidence ... was simply too thin to warrant
    the inference that the corporate insiders received any
    personal benefit in exchange for their tips,” id. at 451–
    52, and furthermore, that “the Government presented
    absolutely no testimony or any other evidence that
    Newman and Chiasson knew they were trading on
    information obtained from insiders, or that those insiders
    received any benefit in exchange for such disclosures.” Id.
    at 453.
    Salman reads Newman to hold that evidence of a
    friendship or familial relationship between tipper and
    tippee, standing alone, is insufficient to demonstrate that
    the tipper received a benefit. In particular, he focuses on
    the language indicating that the exchange of information
    must include “at least a potential gain of a pecuniary or
    similarly valuable nature,” id. at 452, which he reads as
    referring to the benefit received by the tipper. Salman
    argues that because there is no evidence that Maher
    received any such tangible benefit in exchange for the
    inside information, or that Salman knew of any such
    benefit, the Government failed to carry its burden.
    To the extent Newman can be read to go so far, we decline
    to follow it. Doing so would require us to depart from
    the clear holding of Dirks that the element of breach of
    fiduciary duty is met where an “insider makes a gift of
    confidential information to a trading relative or friend.”
    Dirks, 463 U.S. at 664, 103 S.Ct. 3255. Indeed, Newman
    itself recognized that the “ ‘personal benefit is broadly
    defined to include not only pecuniary gain, but also, inter
    alia, ... the benefit one would obtain from simply making
    a gift of confidential information to a trading relative or
    *1094 friend.’ ” Newman, 773 F.3d at 452 (alteration
    omitted) (quoting United States v. Jiau, 734 F.3d 147, 153
    (2d Cir.2013)).
    [4] In our case, the Government presented direct evidence
    that the disclosure was intended as a gift of marketsensitive
    information. Specifically, Maher Kara testified
    that he disclosed the material nonpublic information for
    the purpose of benefitting and providing for his brother
    Michael. Thus, the evidence that Maher Kara breached
    his fiduciary duties could not have been more clear,
    and the fact that the disclosed information was marketsensitive—
    and therefore within the reach of the securities
    laws, see O'Hagan, 521 U.S. at 656, 117 S.Ct. 2199—was
    obvious on its face. If Salman's theory were accepted and
    this evidence found to be insufficient, then a corporate
    insider or other person in possession of confidential and
    proprietary information would be free to disclose that
    information to her relatives, and they would be free to
    trade on it, provided only that she asked for no tangible
    compensation in return. Proof that the insider disclosed
    material nonpublic information with the intent to benefit
    a trading relative or friend is sufficient to establish the
    breach of fiduciary duty element of insider trading.
    In Salman's case, the jury had more than enough facts,
    as described above, to infer that when Maher Kara gave
    inside information to Michael Kara, he knew that there
    was a potential (indeed, a virtual certainty) that Michael
    would trade on it. And while Salman may not have been
    aware of all the details of the Kara brothers' relationship,
    the jury could easily have found that, as a close friend
    and member (through marriage) of the close-knit Kara
    clan, Salman must have known that, when Maher gave
    confidential information to Michael, he did so with the
    “intention to benefit” a close relative. Id.
    Accordingly, we find that the evidence was more than
    sufficient for a rational jury to find both that the inside
    information was disclosed in breach of a fiduciary duty,
    and that Salman knew of that breach at the time he traded
    on it.
    AFFIRMED.
    All Citations
    792 F.3d 1087, Fed. Sec. L. Rep. P 98,567
    Footnotes
    Cooper, James 10/28/2016
    For Educational Use Only
    U.S. v. Salman, 792 F.3d 1087 (2015)
    Fed. Sec. L. Rep. P 98,567
    © 2016 Thomson Reuters. No claim to original U.S. Government Works. 7
    * The Honorable Jed S. Rakoff, Senior District Judge for the U.S. District Court for the Southern District of New York,
    sitting by designation.
    1 Salman raised several additional claims relating to the same conviction. Those claims are addressed in a separate
    memorandum disposition filed concurrently with this opinion.
    2 Another holding of Newman—that even a remote tippee must have some knowledge of the personal benefit (however
    defined) that the inside tipper received for disclosing inside information, see Newman, 773 F.3d at 450—is not at issue
    here, because the jury was instructed that it had to find that Salman “knew that Maher Kara personally benefitted in some
    way, directly or indirectly, from the disclosure of the allegedly inside information to Mounir (‘Michael’) Kara.”
    3 The Department of Justice, which successfully prosecuted the perpetrators of the fraud and viewed Dirks as a hero, took
    the unusual step of filing an amicus brief in the Supreme Court urging rejection of the SEC's theory. Id. at 648.
    4 The same is true in a so-called “misappropriation” case, like the instant case, where the fiduciary duty is owed, not to
    the shareholders, but to the tipper's employer, client, or the like. See United States v. O'Hagan, 521 U.S. 642, 652–53,
    117 S.Ct. 2199, 138 L.Ed.2d 724 (1997).
    End of Document © 2016 Thomson Reuters. No claim to original U.S. Government Works.

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