The case before the Supreme Court involved an investment banker, the brother who pestered him for insider information, and a brother-in-law who made a bundle of money. (Andrew Harrer/Bloomberg)

The Supreme Court on Tuesday said it violates insider-
trading laws for a corporate officer to make a “gift” of insider information to a relative, a decision that makes it easier for those who police Wall Street to bring prosecutions.

The court ruled unanimously that it does not matter if the person supplying the information received money or property or was otherwise compensated for the resulting deals. The court’s decision eased a crimp on prosecutions that a New York appeals court had imposed in 2014.

Justice Samuel A. Alito Jr., a former federal prosecutor, wrote the narrow opinion for the eight-member court. He said it was easily decided by the court’s decision in a 1983 case, Dirks v. SEC, that said a jury can infer that a tipper breached his duty when he receives something of value or “makes a gift of confidential information to a trading relative or friend.”

Federal prosecutors had chafed at the 2014 decision by the U.S. Court of Appeals for the 2nd Circuit in New York, which said there must be something more — “at least a potential gain of a pecuniary or similarly valuable nature.”

Preet Bharara, U.S. attorney for the Southern District of New York, praised the Supreme Court’s ruling.

“In its swiftly decided opinion, the court stood up for common sense and affirmed what we have been arguing from the outset — that the law absolutely prohibits insiders from advantaging their friends and relatives at the expense of the trading public,” said Bharara, who recently met with President-elect Donald Trump and agreed to remain in the job.

“Today’s decision is a victory for fair markets and those who believe that the system should not be rigged.”

The case involved an investment banker, the brother who pestered him for insider information, and a brother-in-law who made a bundle of money.

Maher Kara, a former investment banker at Citigroup, gave confidential information about health-care industry mergers to his older brother, Michael. Michael bought and sold stock based on the tips and then passed the information to his brother-in-law, Bassam Salman.

Salman made a profit of more than $1 million by trading on the confidential information before being prosecuted for securities fraud. He was convicted in 2013 and sentenced to three years in prison. (Maher and Michael Kara both pleaded guilty to securities fraud in 2011 and cooperated with the government.)

Salman appealed, arguing in part that Maher Kara had not received money, gifts or any other reward in exchange for the tips.

But Alito said what was important is that Maher Kara knew that the information was being illegally used.

“Here, by disclosing confidential information as a gift to his brother with the expectation that he would trade on it, Maher breached his duty of trust and confidence to Citigroup and its clients — a duty Salman acquired, and breached himself, by trading on the information with full knowledge that it had been improperly disclosed,” Alito wrote.

Alito acknowledged the court was settling different interpretations from the 2nd Circuit and the U.S. Court of Appeals for the 9th Circuit in San Francisco, which upheld Salman’s conviction.

The 2nd Circuit’s holding that the person supplying the information must also receive something of a more tangible nature “is inconsistent with Dirks,” Alito wrote.

“Maher would have breached his duty had he personally traded on the information here himself then given the proceeds as a gift to his brother,” Justice Alito wrote. “It is obvious that Maher would personally benefit in that situation. But Maher effectively achieved the same result by disclosing the information to Michael, and allowing him to trade on it.”

After a more than eight-year crackdown on Wall Street cheating, Bharara was forced to toss out more than a dozen insider-trading convictions over the past year. The ruling, he said, created “an obvious road map for unscrupulous investors.”