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

15 Pages Posted: 20 Mar 2016 Last revised: 3 May 2018

See all articles by Andrew N. Vollmer

Andrew N. Vollmer

University of Virginia - School of Law

Date Written: March 18, 2016


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.

Keywords: Dirks, Chiarella, Stoneridge, Janus, Blue Chip Stamps, Salman, Newman, insider trading, tipping, tipper, tippee, personal benefit, implied right of action, breach of duty

Suggested Citation

Vollmer, Andrew N., A Rule of Construction for the Personal Benefit Requirement in Tipping Cases (March 18, 2016). NYU Journal of Law & Liberty, Vol. 11, No. 1, 2017; Virginia Public Law and Legal Theory Research Paper No. 28. Available at SSRN: https://ssrn.com/abstract=2749834 or http://dx.doi.org/10.2139/ssrn.2749834

Andrew N. Vollmer (Contact Author)

University of Virginia - School of Law ( email )

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