A Rule of Construction for the Personal Benefit Requirement in Tipping Cases

The personal benefit requirement in an insider trading case based on a tipping violation has been controversial and led to a split in the circuit courts. The Supreme Court's decision in Salman v. United States partly resolved the differences, but questions about the scope of the personal benefit requirement remain.The purpose of this paper is not to recommend how courts should define personal benefit. Instead, it is to suggest that they 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