Document Type


Publication Date



“The crime of insider trading,” Judge Jed Rakoff has said, “is a straightforward concept that some courts have managed to complicate.” In the last eight years or so, insider trading law has wobbled visibly (in the Second Circuit in particular) in applying the standard for tipper-tippee liability originally set in the Supreme Court’s Dirks decision in 1983: from Obus (2012) to Newman (2014), with a detour to the Supreme Court in Salman (2016), and then two Martoma opinions (2017 and 2018). Most recently, the court of appeals offered what to many was a major surprise in its Blaszczak decision that could eliminate some or all of what was central to Dirks in criminal prosecutions not brought under Title 15 (the securities laws themselves). This essay is about the wobble, with particular attention to the question addressed in Martoma as to whether a gift of inside information to a stranger satisfies Dirks’ personal benefit test. This essay examines that question from many different angles—text, precedent, judicial archeology, purpose and so on—and comes out in favor of such liability. The main payoff is less from that particular conclusion, however, than from seeing the movement in contemporary insider trading law: shifting theories about to make sense of the doctrine and its creeping criminalization. The essay pays special attention (and homage) to the contributions of Judge Rakoff, whose rulings offer up a series of deep thoughts and lamentations on the subject to his readers (or to the law-gods).