Two Major Securities Cases For SCOTUS

The first case, Salman v. U.S., is already being heard; the Court has not decided if it will hear the second. A post from Skadden looks at both these cases. Salman addresses uncertainty about the definition of “personal benefit,” first articulated in Dirks v. SEC, as a necessary element to establish a case of insider trading. Salman would clarify and perhaps modify a much criticized interpretation based on Dirks, from the Second Circuit. That 2014 decision, in United States v. Newman, reduced the potential liability of those who indirectly receive confidential information by holding that the recipient is not culpable unless he “knows of the personal benefit received by the insider in exchange for the disclosure,” and the personal benefit would have to be“of some consequence.” The second case, Cyan Inc. v. Beaver County Employees Retirement Fund, could resolve a key threshold issue in securities litigation: whether state courts have jurisdiction over securities class actions that allege only claims under the Securities Act of 1933 – specifically whether the Securities Litigation Uniform Standards Act (SLUSA) of 1988 precludes filing securities class actions in state courts under Section 11 of the Securities Act. “A ruling that SLUSA deprives state courts of jurisdiction over Securities Act class actions,” writes Skadden attorney Amy S. Park, “would bring an abrupt (and for defendants, a welcome) end to the recent proliferation of state court Securities Act class actions.”