well your argument first this morning case fifteen six twenty eight salmond versus united states shapiro mr chief justice and may it please the court in case after case mcnally skilling and mcdonald to name just a few this court has construed federal criminal statutes narrowly to avoid serious separation of powers and vagueness problems this case presents those same constitutional concerns but to a far greater degree because no statute defines the elements of the crime the court should limit this crime to its core as it did in skilling and that core is the insiders abuse of confidential corporate information for personal profit unless and until congress and acts the definition the crime should be limited to trading by the insider or its functional acquittal equivalent where the insider tips and other person in exchange for a financial benefit suppose in this case the person would be in for inside information the brother with the inside information had himself traded the security and gave the statute that doesn't even mention insider trading much less tipping or personal benefit and so in that instance it wouldn't be covered and he can do whatever he wants with the money if  the setting up the question isn't he is that in her instance where the tippy does the trading the tip is just an accomplice this is standard a couple well no your honor this is a statute this is a case where we have to take a step back and look at the fact that the statute doesn't define the elements it doesn't even mention insider trading much less tipping and the the  gain whether trading himself and profiting on the information by doing so or whether it's by circumventing that rule as discussed in dirk's and essentially giving the information to someone else so that he can get a financial kickback that's that's i'm sure maybe i'm missing we one of us is missing the import of the question are you suggesting that if two people get together one of them has inside information and he says to the other person why don't the two of us why don't you trade on that and then you and i will split the proceeds that's not covered that is covered i'm sorry what i meant was that if the insider as occurred in this case  undisputed in this case did not act for any financial gain did not make any money at all that's what is not covered that his brother's statement when he was asked about treated by meyer the younger brother he said i owe somebody money isn't that most naturally read to be either give me the money to pay this person back or give me information that lets me pay him back isn't that always the quid pro be if you believe that if you give someone a gift it's going to cost you one way or another you're going to give them something of value or you're going to substitute money for the gift or you're going to do something that saves you money by giving the tip well your honor i think the problem with that is that virtually anything with any disclosure would then amount to a gift and this court has been crystal clear that that not any disclosure leads to a violation of that's true but there comes the government's suggestion that the disclosure has to be for a person personal benefit or personal purpose but there has to be a reason you're doing it not accidentally not not unknowingly but something you're doing because you want to receive some benefit from it well in this case it quite clear that my hair did the insider brother didn't receive any benefit at all and indeed the district court and the f c c made that clear he did not do this for any kind of self benefit and i think the evidence in the record even construed in the light most favorable to the government as it must be demonstrates that most of the insider got the scant benefit of getting his brother off his back this was not a willing transfer of inside information but why do you say that scamp well your honor i think well we have to get back to the fact that this though my bigger question is what why do all the disclosure forms we have to fill out they have a lot of relatives you have to put like your minor children your wife and giving gifts you have to disclose your minor children your wife i mean why are the statute books filled with instances where the public wants to know not just how you might benefit but how your family might benefit well your honor the statute books are filled with rules like that but section cause me so you know i realize it doesn't but i mean i'm i'm not looking for the reason why and of course i c suggest a reason because they think very often though it depends on families to help a close family member is like helping yourself and that's not true of all families well many it is i think that  frauded i take it or in the subject of deceit is the company whose information you use and when you use their information which you shouldn't and tell it to someone you're hurting them and  then there is a subset of cases that we prosecute and the subset of cases that we prosecute are the cases where having to use that information you use it to benefit yourself and the question i take it is when you use it to benefit a close family member is that in effect benefiting yourself cecille b demille setter maybe jack warner rule of relativity never hire a relative and you could have you could have that view but you also have the view that helping a relative is helping yourself that seems to be where we are in this case and the law is filled with instances where they do seem to think it's the same and there are a lot of cases here that think it's about the same so why isn't well your honor there are there are a lot of cases and the only cases that this court has decided are she wrote dirk's and o'hagan the only case in which the court held for the government was  insider was was making his own profits to the tune of finish you know you're asking us to ignore some extremely specific language in dirk's which of course was decided quite some time ago so i'm just going to read and directs the court is talking about when it would be proper under the statute to convict somebody for insider trading because there might be a relationship between the insider and the recipient or an intention to benefit that particular recipient and then it goes on to say when an insider makes a gift of confidential information to a trade in relative or friend and then in the last paragraph of the opinion where it's really summing up everything that it's done the court says the tipper's received no monetary or personal benefit nor was their purpose to make a gift of valuable information to the tipi so there's a lot of language in dirk's which is very specific about it's not only when there is a quid pro quo from the tipi to the tipper but when the tipper makes a gift to the tipi and in particular a relative or friend holding of the case is is far different and dictum should not be used to be the basis for criminal liability when we have a statute that i don't know recip original gentlemens the court is very clearly setting out a test here and this is part of the test and it's certainly not dictum and dirk's when the court says and thus the test is whether the insider personally will benefit directly or indirectly  disclosure i agree with your justice kennedy and in fact the court goes on to then say right after that absent some personal gain there has been no breach of duty to stockholders and personal walking about benefit and personal gain no in fact the opposite in in most areas of the law a gift is supposed to be something that is not intended to benefit the giver and it's critical in this area and i think the securities financially because you make them more secure well i want to be very clear about the tests that we're proposing because i do think that it's going to capture a number of these family situations the point is that the line has to be clear whether it's family or anyone else that the disclosure  being given to and under the peculiar again test that we proposed certainly there will be many cases where the government can introduce evidence showing at the kind of financial interdependence that will illustrate that the  insider does benefit financially from the disclosure i'm sure that's going to be true in most situations involving spouses and many other situations involving a close relative let me give you a hypothetical let's suppose i would like to give a gift to a friend of mine but it's just too expensive for me to give it and then i pass a co worker's desk and i see a hundred dollar bill sitting there and i take the one hundred dollar bill and now i can give a gift that i had wanted to give but i couldn't now have i benefit fitted from stealing the hundred dollar bill yes you are yes you have and why should the issue be any different if instead of stealing the one hundred dollar bill off my coworkers desk i instead steal information and give the gift of that information rather than give a gift of cash well there are certainly going to be some situations involving gives that will be covered so for example if i have a tradition every once a year at christmas time to give a household employee a bonus and one year i decide to give her a tip instead that would certainly qualify it's going to depend on the nature of the evidence and whether there's ample i  suggesting by the hypothetical is that we all have our own interests and purposes but hind given gifts some of those might be very practical and pragmatic some of them might be more  we give gifts for individual interests and purposes and here i'm stealing corporate information it's essentially a kind of embezzlement or conversion i'm stealing information to give a gift to somebody i know it might be as in this case a family member it might be a friend and i benefit from that because i mean it's the i personally benefit it's the exact opposite of using corporate in for information for corporate purposes i'm using it for my own personal purposes but your honor that would be true in virtually any instance one could think of where an insider disclosed confidential corporate information whether it's in a business setting or as is often the case a mixed you've been supporting every month for your entire life so instead of giving him one month or two months that regular one hundred dollar bill you choose to give him corporate information  what is that person more culpable than the person who just said it's a relative comes and says be nice i need some money and you give him a tip instead of the cash i think the issue is that there has to be a clear line we're dealing with a crime that was never defined by congress none of these words are in the statute congress isn't defined what's the sec to verman appeal it if or what's the third word  who doesn't disclose that he's using your information is an omission that's been classically a fraud so i don't understand why you keep saying that the law doesn't this fi this because your honor the law says nothing about insider trading and as that your relic court said the statute provides no specific guidance nor does the legislative history in any this is very similar to the honest services fraud crime or indeed before that statute was in acted the mail fraud statute that existed before the mcnally case that the statute talked about fraud the honest services stat fraud statute talked about fraud but it provided no specific guidance as to what would violate and this court held that this statute needed to be construed narrowly to ensure that there was a clear line other countries have insider trading laws as in all of those laws use words like insider and define under what circumstances a person is violating the law by trading this court has repeatedly held that there is no general duty to refrain from insider trading and it's essential that the market long time exactly what's criminal and what civil and so forth has been developed by courts over a long time the statutes been around since the thirty's and we have courts developing law it and i believe the marketplace pays a lot of attention to that and virtually every court i think but this one has held that this does extend  giving inside information to a close relative and it seems to me and i'm giving you a chance to respond to that it's suddenly to take the minority statute here or to take the second circuit is what i'm thinking is really more likely to change the law that people have come to rely upon than it is to keep well i don't want to get your view on that i don't think so your honor and i think some of the amicus brief illustrate that there's been a tremendous amount of marking this in the securities industry association in particular has had a lot of trouble determine its members have had a lot of trouble determining when they can and can't use market information of this sort and regulation f t by the way is very clear that it does not get purport to change the anti fraud laws the the regulation itself provides that a violation of regulation what address the problem we're discussing no just this kind of i don't agree with that because what this court has repeatedly held in a number of cases going back to the santa fe case is that not every breach of fiduciary duty violates section ten b and it has to be a fraudulent preach and the question of whether it's a fraudulent breach depends upon whether the insider is doing the disclosing in exchange for a personal benefit that's the test it's not simply whether there's any old breach of many family circumstances where this would be a gift but i think the facts of this case show that the insider was not he was he was being pestered by his brother and pressured to release the information he didn't even know he was trading until later in the process and even then the blood just trade in this case involves a situation where he immediately called his brother back and begged him not to trade in the brother said he wouldn't so i don't agree with that your honor but i think it is  ial in order for there to be a clear line that the court hold that the insider must personally benefit in a concrete way unless and until congress if that's an under inclusive test congress can act congress can preference for a child in college admissions romantic favors the personal benefit you say just has to be tangible and concrete but it doesn't have to be money right it doesn't necessarily have to be money it has to be something concrete is that you're defining the and it has to be tangible it has to be tangible it doesn't have to be cash it has to be something that is either immediately peculiar or in can be translated into with you because of the gift language of jerks how else could you suggest to limit liability what other ways are there to take care of some of the closer cases that exist yes she has given us one proposal which you are well besides the fact that it has to be intentional that i don't think there's any other test that the court could provide that wouldn't essentially be a judicial  expansion retroactively of a statute that doesn't address the question in violation of the separation of powers i think that the other thing that i i would like to come back to which we talk about in the briefs is the fact that there's a very analogous situation with respect to the private right of action in ten b which was also created by the courts and this court has repeatedly held that in that context which is not a criminal criminal context and does not involve risk to a person's liberty that the court must now only construe the statute and not expanded further and it's for congress to decide whether we expanded further and i think that mr perry here is not a question of expanding it further you're asking us to cut back significantly from something that we said several decades ago something that congress has shown no indication that it's unhappy with and in a context in which i mean obviously the integrity of the markets are a very important thing for this country and and you're asking this essentially to change the rules in a way that threatens that integrity no your honor i don't think we're asking you to change the rules this court has only addressed this question once i don't think the gift of languages is the holding of the case the holding of the case is that the insider has to get a personal gain the point of the test in the case which again ruled against the government is to ensure that what's captured is something that is essentially a circumvention of the test the court discussed into your role where the insider is improperly profiting from the information and with respect to the discussion in the case about when when a duty would arise and the court in that case held that there was no duty but that a duty would have or arisen if he had been an insider in the company  shares were at issue and the reason for that is that the court held that it would be a fraud to exploit the information for his personal trading profits because he had a duty to those shareholders and a duty to speak and either disclose from trading with respect to the integrity of the markets getting back to your question justice kagan i think that that is clearly a policy question and it is a very complex policy question is not is one nearly as simple as the government would like to have the court believe and i think there's an extensive literature which is cited in our briefs and some of the amicus briefs which illustrates that there's a robust debate among academics regulators market participants about what what is the weather insider trading should be regulated at all but more importantly to what extent and how do you do that while ensuring that there is sufficient free flow of information to the markets that this information can actually work its way into the price i wasn't suggesting that there was there are easy answers to the question of what what contributes to the integrity of the market i was suggesting that it's a reason for caution in changing the thirty year old rule that everybody has understood and l to favored friends family members and acquaintances who could all use it in trading without the knowledge of the public or the investors on the other side of the trade this would be deleterious to the integrity of the securities markets it would injure investor confidence and it would contradict a thirty three year old precedent of this court that was designed to announce the circumstances in which material nonpublic information possessed by an insider could not be used as something of a benefit that might translate in the future into gain some of them might actually involve a quid pro quo my point is that under petitioners theory when they are gifts in other words when the information is given out to a romantic partner or to a struggling child who's having difficulty making it or as in this case a brother who at one point actually was offered money by the insider but turned it down and preferred the information  those things would not be criminal well not everything is a gift just because it's disclosed i mean social acquaintances you know the people say you know we're all going away for the weekend why don't you join us i can't i'm working on this google thing or something like that it means something to the other people you wouldn't call that a gift you'd call it the social interchange and maybe it's you know something you should have been more careful about saying but it's quite different than a gift and it seems to me that however you read dirk's it certainly doesn't go beyond gifts so i don't disagree with that mr chief justice there is a difference between a breach of the duty of confidentiality with respect to information and the kind of breach that was defined by the f and katie roberts and incorporated into the law of securities fraud in this court's decisions in chiro and dirk's and as to on insta to it the first element is that the information was made available to the insider for a corporate purpose and not for personal benefit or personal use and the second is that the insider is providing it for the purpose of attaining a personal advantage either for himself or somebody else so then the social casual social interchange hypothesised would not be covered under your interpretation it would not be a personal benefit now it might give rise to liability on and the part of the tip be if there was an understanding between the parties the insider and the tip the that comp conversations of that kind would remain calm kind of been easy it's kind of an easy line to draw isn't it between something that you characterize as a gift and something that would be characterized as just want to tell them why i can't come so the burden is on the government to show that the information was given for a purpose of trading and that it was in breach of fiduciary duty and in most of these cases there's no evidence of any legitimate corporate purpose for the disclosure whatsoever difficult part is for a personal advantage at least to me and the question is what counts if the tipper gives inside information to a member of a family member or friend when is it for a personal advantage and when is it not for a personal advantage so i think as we just saw i think justice prior to that whenever information is given it's inside information it's given by an insider to another person for that person to be able to profit on it something that the insider him self is forbidden to do so if you know i to you or anyone in the world and whom you happen to know and you believe that that person will create on it that is for a personal advantage yes yes what is the advantage you have taken valuable corporate information and you're giving a gift of that information to a person to enable them to profit if so what is the personal advantage that you receive the advantage that you receive is that you are able to make a gift with somebody else's property and i think that to the extent that the court used the word that is a personal advantage well justice prior to step back for a minute what the court was trying to do and was separate out when an insider was breaching his fiduciary duty by providing information and when he was not and the line that the courts elected tracks the basic duty of loyalty in corporate law it doesn't seem to me that your argument is much more consistent with darks than is shapiro's i suppose someone the insider is walking down the street and sees someone who has a really unhappy look on his face and the says i want to do something to make this person's day and so he provides the inside information to that person and says you can make some money if you trade on this is that a violation yes and i'm trying to explain why that is i think that dirk's adopted the basic line that set forth in the duty of loyalty which is well established that when you are given something for corporate purposes you may not use it for personal reasons and that was exactly what the court dopped and whatever why did they use the word advantage if you keep going back to the the part that everybody concedes this tipper is using information he shouldn't use in a way he shouldn't use ok conceded it's the next step when is he a lot of bull and what the words are is when he uses it for a personal advantage and it sounds to me as you are saying and you said this when ever the tipper line between people who had information for corporate purposes and used it consistently with those purposes and people who had access to corporate information made available to them only for corporate purposes and used it for personal benefit and it gave a number of examples and i think that the way to understand dirk's is to synthesize the various examples the court gave to understand the principle underlying the decision and so the examples provided the examples include direct qui quo profit pay clearly a personal benefit it also includes something far less tangible reputational benefit that will possibly translate in the future into financial advantage and then it clearly included in the category of things that were not appropriate corporate purposes giving a gift to somebody and it explained why if you give a gift of information to somebody for trading it is equivalent to the insider using the information to trade himself and then making a gift of the profits so you aren't recipient you are arguing for an exact relationship between not for a corporate purpose and for personal benefit is there any area that something falls in the middle that that it's it's not for a corporate purpose but it also doesn't qualify as for personal benefit whenever you talk about how do you define personal going personal benefit you say this was given not given to him for corporate purpose was an exact parallel i think i corporate officers duty of care as distinct from the duty of loyalty would give me the example something that is not for a corporate purpose but it's also not for personal gain under your view when there is no knowledge that the  individual to whom you're getting give the information is trading there's no breach of the katie roberts duty so in your hypothetical of the social conversation the government would not seek to hold libel somebody who was loose in their conversations but had no anticipation that there would be trading on interest in who the government would seek to have libel i'm interested in what the rule is going to be adequate in the to mr chief justice i'm not just saying that where you are court is not equated the two i understand but i think that that that the the wall that we're asking the court to adopt is really a rule that tracks the basic principles of duty of loyalty that lie at the base of the jerks opinion and i realize that the darks opinion used language in a to use a variety of formulations personal benefit personal advantage personal gain but the examples that the court give gave to support that doctrinal analysis i think lead to the conclusion that what justice powell was trying to do in the opinion was to distinguish cases in which somebody was a corporate officer and they used the information for an appropriate purpose maybe somebody went out and traded on it afterwards richard can i'm not sure that your solution is going to clarify much of this here because now i think the fight is going to be over what was the reason that the two poor gave for giving the two i mean in this very case there were three reasons for breaching the confident rule of confidentiality the first two for mayor to become more knowledgeable of the health care industry under your reading if he had no knowledge his brother w that was not actionable correct well correct just to sort of meyer but that also was not information that was flowing from the insider to his brother what we charged in this case where the circuit i'm not talking about but there were three examples of breaching confidentiality the first was to be for him to become more knowledgeable of the health industry the second was to help the father with his medical care and the third the one new charge was giving of information knowing that his brother was going to trade on it that's how do you draw the line among those three all three were for personal reasons no but the only one that involved knowledge or anticipation of trading were the circumstances in which the brother was basically funding his older brothers who were trading if all he did it for was to get information first father had no idea that his brother insider who's been given the information for a corporate purpose trades on it or tip somebody else to trade on it the second theory is misappropriation and if the older brother in this instance was given confidential information under a circumstance in which there was a understanding that there would be no use of that information for personal benefit or under the us he sees current rule twenty five to which defines these kinds of close family relationship siblings parents and children husbands and wives as being relationships that are typically ones in which secrets are protected the older brother could be charged with misappropriating information from the younger one but  correct how how does it continue well tipping chains can can go quite a ways when the information is passed and the limitation on when the government can charge these cases is a limitation of proof we need to be able to show that the tipi perhaps at the end of the chain will be more difficult than the ones earlier in the chain had knowledge that the information or originated in a circumstance in which there was a breach of fiduciary duty for personal benefit i don't know should have known no we're in a criminal case we have to show knowledge now we can rely on conscious avoidance that's a very classic instruction of the court clarified in global tack about how knowledge can be inferred when someone deliberately in voids confirming facts of which they are or should be aware but that involves a personal culpability that takes care of i think the concern that criminal liability will extend forever it won't let me look at the on the other side if you think about the tip or now you've used a couple of times the phrase knowledge or anticipation yes that there would be trade and yes so is is that something more than he thinks there could be yes and i mean he thinks there would be is it is strongest yes it let me give you this example because that this goes to that this so the person with the inside information has had a few drinks at the country club and talking to some friends and discloses the inside information to the to the friends and one of the friends and then trades on the information what would you have to prove as to the mental state of the to her and the tippy so the tipper would you have to prove that he knew that one of the friends would trade on the inside information or that he was reckless as to whether the friend would trade on the inside information he knew this was a person who was in the stock market and as to the tippy well would you have to prove that the tippy knew that the insider knew that he was going to train on the information what would you have to as to the tip as to the tip or we submit that an element of the case you robert stuti is that the insider anticipated that the person whom he gave the information would trade is anticipated the same as he knew he would yes i think that knowledge anticipation understanding is the language that the second circuit is used to describe it off fits the bill we're talking here about a gift but it's not enough it's like well i think he might know it's not where you know i'm sort of betting that he would but i don't really know when a criminal case we need to show a breach of the future duty we're also going to have to show an intent to defraud fraudulent intent and we're going to have to show willfulness in order to obtain a criminal conviction why do you want to put knowledge the knowledge that it will be used for trading and as part of the breach of duty if you do that then you have to prove that the to be knew that the two poor thought it would be treated yes and i don't think that that's a very difficult burden because in most of these situations it's obvious why it's being done i can't you put it in the transmission of information that was made available only for a corporate purpose for personal benefit with the intent and knowledge that the individual is going to trade that doesn't doesn't say it now has a sentence here which is exactly what's hanging  up and exactly what i thought you were going to answer before you got cut all sentences elements exist also when an insider makes a gift of confidential information to  trading relative or friend yes but doesn't sound as if the writer of those words had in mind any person in the world in each instance you have to know that that person in a portion of the opinion in which justice powell is giving examples of the concrete circumstances objective criteria that will allow the government to establish that the purpose of the disclosure was for personal benefit as opposed to what the f c c was concerned about that people would use a stance of all business justifications to explain why the information was being given out and the f c c was concerned this is going to create a quagmire of subjective analysis and the courts response was to give examples in which the objective criteria would help a stablished and the confirmation of this i think just as prior is that at the end of the opinion the portion that just read earlier today it's on page six sixty seven it's where the court analyzes why seacrest and the other insiders had equity funding had not occasion the liability for dirk's what and i read now i want you to tell me what i can read to get the explanation of dirk's with the majority of lower courts have followed it seems to me the second circuit has not read it as you're reading it  correct after all they came to the opposite conclusion and are there circuits that have read it just as you had said you walk down the street you find anybody unit even know him but he does keep saying trading trading trading trading and you tell him and therefore you know that he will likely trade now in other words an anonymous person very far just what you're arguing well let's sorry i don't follow this case does not involve that situation this case involving oh i realize this case i'm prototypical situation that actually arises in the real world and gets prosecuted there are very few cases that involve this hypothetical of somebody distributing inside information i'm not worried about that i'm not worried too much about this case i am worried about line drawing and you want to draw a line so that friend relative doesn't matter and before i write those words i'd like to know what circuit courts have followed that approach so i think that there aren't a lot of cases that don't involve friends or family members i think the case that most closely tracks the analysis that i think best explains dirk's is the seven circuits decision in case called  vs mayo it's cited in our brief it doesn't involve two people who were close friends because ordinarily those are the circumstances in which people decide to risk criminal liability to give out ins from outside information so that somebody else can profit but the court  makes the statement in it that there was no corporate reason there's no legitimate reason why one friend who's an insider at the corporation is giving information to a third person he didn't have to give information at all so why did he do it except for what the court concluded fits within the dirks language what if you have a situation where you know close friends or whatever and who once was i want to tell you what i've been working on it's pretty interesting it tells us about whatever you do don't go buy stock you can't do that that's against the law right and that is a situation you're not going to prosecute that situation when the big goes and makes one hundred thousand dollars from that that temper in that situation is i disclosing information in the context where he has made an express statement and i'm assuming understanding's between the two that the information would not be used the temper is not liable for insider trading that to be who then trades  charged under the misappropriation theory for having taken information from a relationship of confidence or an express statement and i'm agreement not to use the information and the fraud there is between the tipper and the tip be not between as here the tipper and the people to whom the temper owes a fiduciary duty there this is explained in the u s he sees rule ten b five two which helps define the kinds of relationships that support a misappropriation theory of liability but i  most clear is that there are situations in which inside information can be legitimately revealed even when it is known that it will occasion training and it doesn't violate the insider's fiduciary duty mr drippin i think you're taking 're going to truly i think they are in most often it's because you claim that they should have known it was confidential and a criminal case were not claiming that the f c c in a civil liberty there's a legion of cases or a grid for this for this argument whereas i really don't know what is our justice sotomayor because i don't think that that's what we're seeing we're certainly not making that submission in this case and i think that the cases that we are trying and the jury instructions that we are  street who looks dejected is not my friend or a close relative yet i give him a tip and say go trade on this it'll make you a lot of money that person that too poor would not do while he would justice sotomayor for the very reason that you yourself articulated in that situation there's a gift of information to someone with the intent that the person trained that just so it meets and relevant whether it's a friend or family member my submission is that the best way to understand is that it goes to a breach of fiduciary duty which would not be limited to two categories like that and i don't think that justice powell in articulating this species of personal benefit was attempting to rely on i was trying to explain this before just prior at the end of the opinion where the court precisely says that seacrest is not liable because he didn't make any financial advantage it goes on to say nor did he make a gift of valuable information to dirk's now the court didn't dirk's wasn't close friend dirk's wasn't a relative therefore he's out of the picture the court applied gift analysis in that situation precisely because the line that the court was trying to draw was between the appropriate use of corporate information and the inappropriate use but i don't even i get your your theory is why it doesn't make any particular difference and indeed in that same paragraph where the court says relatives or friends the court has to sentence before just talks about an intention to benefit a recipient without any direct sense of who that recipient has to be on the other hand as you say almost all of these cases are relatives and friends yes and things might look different if we had a case that was not a relative or friend and why did not separate out that strange or unusual hardly ever prosecuted situation and say we're not dealing with that here we have nothing to say about it i'm fine with that we are not seeking the court to go beyond dirk's these are the cases that actually do arise in the real world there is one case that involves a guy who is an insider who tipped his barber and the district court said well the barber and the insider weren't close enough so that it didn't count under dirk's i think that's wrong i don't think that there's a good principle for it but the court or is there a difference between friend an acquaintance it's your children too so this is precisely the reason why i think it doesn't make sense from a point of view a principle or application to draw a distinction that's based on words in the opinion that the court didn't actually articulate when it applied them to the very situation before it there is more nebulous features about relationships once you confine it to under fine terms as friends or relatives but this case clearly doesn't indicate implicate that at all it's in the heartland of the insider trading prohibition it's one brother to another brother there's a very close relationship the record is replete with all of that the court doesn't have to deal with further outlier cases and it doesn't have to three years and with the exception of the second circuit in the newman case lower courts haven't had any difficulty applying it there has been a couple of outlier cases as i mentioned involving barbers but almost all of these cases involve situations in which there is a pretty good explanation for why the temper would be providing information for the to be in breach of a fiduciary duty and in cases when there is a legitimate corporate purpose alleged for the disclosure which conceivably may have been the concern of the newman dirk's already addressed that to it said that when there isn't a stand simply a legitimate business justification proffered for the disclosure people are not going to be wandering around in the dark trying to sort out a subjective intent there will be objective factors from which the relevant purpose of personal purpose can be inferred and that's the portion of the opinion in which the court goes through examples of what those objective circumstances will be it includes the intention to benefit a particular person and it very specifically includes the gift situation if the court feels more comfortable given the facts of this case of reaffirming dirks and saying that was the law in one thousand nine hundred three it remains the law today that is home with the language that was actually used in dirk's and wants to reaffirm it it should do so clearly congress is aware of this line of cases it has never disturbed it it is actually incorporated the words insider trading into section ten it's not like this is a stranger to congress and when it applied tenby prohibitions to security swap agreements is a well known area of the law and the submission of the government is that the court should reaffirm it and for a kid benefit as i've been articulating it conscious avoidance can be used to establish that knowledge the person doesn't have to know all of the details of exactly what the breach of fiduciary duty was there has to be enough information so the government can prove beyond a reasonable extent that the tipper understood that the tipi would trade that's a requirement of knowledge it's not a requirement that the person intended that the tip be trade just an understanding and knowledge that it would happen the tipi has to have the knowledge of the breach often times this can be inferred from circumstantial evidence this is a perfect example of it the petitioner in this case with the was the brother in law the insider he knew that the information was coming out of citi group he knew that there was no legitimate reason for it to be disclosed from his brother and insufficient finally a court believes that the government believes that the court should affirm the judgment in this case thank you thank you counsel mr perry you have four minutes remaining the government's argument to this court illustrates precisely the dangers with leaving a statute without having a statutory definition the government now says for the first time in this in its merits briefs and in its argument to this court that somehow section ten b and somebody a duty of loyalty standard that's nowhere in either the statute or the dirks case indeed they never argued this to the district court not to the ninth circuit not in the brief in opposition nor in the newman case and the facts of newman are actually inconsistent with the standard that the government purports to propose because the government claims that it will insist that the insider has to have an intention that the tipi trade and if you look at the facts of newman you'll see that the undisputed evidence was that with respect to the nvidia company tipper there was no evidence that that insider knew his acquaintance from church was going to trade on the information and likewise there wasn't any evidence that the other insider was aware that anyone would trade and the other is the example of the other instructor also illustrates that sometimes it's not so clear whether someone has a corporate purpose or personal purpose because sometimes purposes are mixed in that instance the insider was speaking with an analyst who was checking his financial model and as the evidence in the case shows this happens every day in the markets the government argued that he was also seeking career advice from the other individual who is a college friend but there is no indication there that he knew he was going to trade and  furthermore the government's argument is completely inconsistent with drops the facts of dirk's that it was undisputed on the record or that the insider secrets disclose the information he was seeking to expose a fraud but he intended the dirt would share the information with his institutional clients so that they could trade and drive the price of the stock down and the court expressly rejected in footnote twenty seven a test almost identical to what the government is proposing here the se c the court said appears to consider contend that an insider in fairy a bully violates a fiduciary duty to the corporation's shareholder by transmitting nonpublic corporate information to an outsider when he has reason to believe that the outsider may use it to the disadvantage of the shareholders and the court rejected that argument and later in the footnote the court talks about the just sense argument and the dissent argued that the court said by perceiving a breach of fiduciary duty whenever inside information is intentionally disclosed to securities traders the dissenting opinion would achieve the same result that the court had rejected in chiro and rejected again that is effectively a parody of information rule so the test is inconsistent with jerks furthermore as i believe mr breen been mentioned one of the points in the section of the opinion that discusses the test is the concern that course shouldn't have to read the party's minds as to this element of the offense as opposed to see enter and to the extent the government claims that there's an intentionality element to the breach of duty that would violate that was disclosing information to his brother the only thing the record shows is that there was testimony that michael told him the information came from the brother there was no evidence he had any idea why and i believe just to sort of my or pointed out earlier there were three different reasons that various points that information was disclosed one was so that he could educate himself about the science of the work that he was doing one was so that they could just gust potential drugs for their elling father and then there was the third phase but there was no evidence whatsoever that petitioner had any idea why the information was being disclosed and finally with regard to the point about the congressional statute the fact of the matter is if congress could be said to rather than assure senate congress it could be said to have ratified anything all it could be said to have ratified is that if there is an insider trading them there's no indication that congress ever ratified the dirks gift languish thank thank you counsel the case is submitted