14779792521_b054cf2506_zIn the few days since the Supreme Court handed down its decision in Salman v. United States, many commentators have said, in effect, that criminal prosecutions for insider trading are alive and well.  Alive, yes; well, maybe not.

At the risk of quoting myself, almost exactly two years ago I posted an item on this blog entitled “There ought to be a law”.  My belief at the time was that insider trading law is so byzantine that it’s impossible to know where legally permissible behavior becomes legally impermissible behavior.  For better or worse (worse, IMHO), nothing has changed all that much.  In the Salman decision, SCOTUS says that a prosecutor need not prove that a tipper received something of a “pecuniary or similarly valuable nature” to convict the tipper of illegal insider trading.  So far, so good.  However, as many commentators have pointed out, Salman leaves any number of other issues wide open.

I’m not criticizing SCOTUS for the decision.  The courts in general, and the Supreme Court in particular, traditionally decide cases on the narrowest grounds available, and that is almost always a good thing.  In the Salman case, perhaps it’s enough that the Court decided that the receipt of cash or something of a “similarly valuable nature” isn’t necessary to maintain a prosecution.  However, decades of ill-advised prosecutions and the odd decisions that the courts have made (as courts often do) to achieve equitable results have led to great uncertainty and inflamed the public perception that white collar criminals can and do get away with larceny.

It would have been nice over the past few years if Congress, instead of enacting legislation dealing with all sorts of disclosure and governance issues that few investors care about, could have turned its attention to defining insider trading, including whether the goal is to level the playing field or to deter breaches of vague and hard-to-define forms of fiduciary duty.  Alas, that didn’t happen, and in the brave new world of 2017 it’s not likely to happen.