                    FOR PUBLICATION

      UNITED STATES COURT OF APPEALS
           FOR THE NINTH CIRCUIT


 UNITED STATES OF AMERICA,                       No. 14-10204
                 Plaintiff-Appellee,
                                                   D.C. No.
                     v.                         3:11-CR-00625-
                                                    EMC-1
 BASSAM YACOUB SALMAN, AKA
 Bessam Jacob Salman,                              OPINION
               Defendant-Appellant.


          Appeal from the United States District Court
             for the Northern District of California
           Edward M. Chen, District Judge, Presiding

                     Argued and Submitted
            June 9, 2015—San Francisco, California

                          Filed July 6, 2015

      Before: Morgan Christen and Paul J. Watford, Circuit
       Judges, and Jed S. Rakoff, Senior District Judge.*

                   Opinion by Judge Rakoff




  *
     The Honorable Jed S. Rakoff, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by
designation.
2                  UNITED STATES V. SALMAN

                           SUMMARY**


                           Criminal Law

   The panel affirmed a conviction by jury trial for
conspiracy and securities fraud arising from an insider-trader
scheme.

    The panel held that the defendant did not waive a
sufficiency of the evidence issue raised only in a
supplemental brief because both parties had an opportunity to
brief the issue and to address it at oral argument.

    The panel held that the evidence was sufficient to support
the conviction because it showed that an insider breached his
fiduciary duty by disclosing information to a trading relative,
and that the defendant knew of that breach at the time he
traded on it. The panel declined to hold that under the
Second Circuit’s opinion in United States v. Newman, 773
F.3d 438 (2d Cir. 2014), the government also was required to
prove that the insider disclosed the information for a personal
benefit.


                             COUNSEL

John D. Cline (argued), Law Office of John D. Cline, San
Francisco, California, for Defendant-Appellant.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                   UNITED STATES V. SALMAN                              3

Merry Jean Chan, Assistant United States Attorney (argued),
Melinda Haag, United States Attorney, Barbara J. Valliere,
Chief, Appellate Division, United States Attorney’s Office,
San Francisco, California, for Plaintiff-Appellee.


                              OPINION

RAKOFF, Senior District Judge:

    Defendant-Appellant Bassam Yacoub Salman appeals his
conviction, following jury trial, for conspiracy and insider
trading. He argues that the evidence was insufficient to
sustain his conviction under the standard announced by the
United States Court of Appeals for the Second Circuit in
United States v. Newman, 773 F.3d 438 (2d Cir. 2014), which
he urges us to adopt. We find that the evidence was sufficient,
and we affirm.1

                          BACKGROUND

    This case arises from an insider-trading scheme involving
members of Salman’s extended family. On September 1,
2011, Salman was indicted for one count of conspiracy to
commit securities fraud in violation of 18 U.S.C. § 371 and
four counts of securities fraud in violation of 15 U.S.C.
§§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5, 240.10b5-1 and
240.10b5-2, and 18 U.S.C. § 2. At trial, the Government
presented evidence of the following:



 1
  Salman raised several additional claims relating to the same conviction.
Those claims are addressed in a separate memorandum disposition filed
concurrently with this opinion.
4               UNITED STATES V. SALMAN

     In 2002, Salman’s future brother-in-law Maher Kara
joined Citigroup’s healthcare investment banking group. Over
the next few years, Maher began to discuss aspects of his job
with his older brother, Mounir (“Michael”) Kara. At first,
Maher sought help from Michael, who held an undergraduate
degree in chemistry, in understanding scientific concepts
relevant to his work in the healthcare and biotechnology
sectors. In 2004, when their father was dying of cancer, the
focus of the brothers’ discussions shifted to companies that
were active in the areas of oncology and pain management.
Maher began to suspect that Michael was trading on the
information they discussed, although Michael initially denied
it. As time wore on, Michael became more brazen and more
persistent in his requests for inside information, and Maher
knowingly obliged. From late 2004 through early 2007,
Maher regularly disclosed to Michael information about
upcoming mergers and acquisitions of and by Citigroup
clients.

    Meanwhile, in 2003, Maher Kara became engaged to
Salman’s sister, Saswan (“Suzie”) Salman. Over the course
of the engagement, the Kara family and the Salman family
grew close. In particular, Salman and Michael Kara became
fast friends. In the fall of 2004, Michael began to share with
Salman the inside information that he had learned from
Maher, encouraging Salman to “mirror-imag[e]” his trading
activity. Rather than trade through his own brokerage
account, however, Salman arranged to deposit money, via a
series of transfers through other accounts, into a brokerage
account held jointly in the name of his wife’s sister and her
husband, Karim Bayyouk. Salman then shared the inside
information with Bayyouk and the two split the profits from
Bayyouk’s trading. The brokerage records introduced at trial
revealed that, on numerous occasions from 2004 to 2007,
                UNITED STATES V. SALMAN                     5

Bayyouk and Michael Kara executed nearly identical trades
in securities issued by Citigroup clients shortly before the
announcement of major transactions. As a result of these
trades, Salman and Bayyouk’s account grew from $396,000
to approximately $2.1 million.

    Of particular relevance here, the Government presented
evidence that Salman knew full well that Maher Kara was the
source of the information. Michael Kara (who pled guilty and
testified for the Government) testified that, early in the
scheme, Salman asked where the information was coming
from, and Michael told him, directly, that it came from
Maher. Michael further testified about an incident that
occurred around the time of Maher and Suzie’s wedding in
2005. According to Michael Kara, on that visit, Michael
noticed that there were many papers relating to their stock
trading strewn about Salman’s office. Michael became angry
and admonished Salman that he had to be careful with the
information because it was coming from Maher. Michael
testified that Salman agreed that they had to “protect” Maher
and promised to shred all of the papers.

    The Government further presented evidence that Maher
and Michael Kara enjoyed a close and mutually beneficial
relationship. Specifically, the jury heard testimony that
Michael helped pay for Maher’s college, that he stood in for
their deceased father at Maher’s wedding, and, as discussed
above, that Michael coached Maher in basic science to help
him succeed at his job. Maher, for his part, testified that he
“love[d] [his] brother very much” and that he gave Michael
the inside information in order to “benefit him” and to
“fulfill[] whatever needs he had.” For example, Maher
testified that on one occasion, he received a call from
Michael asking for a “favor,” requesting “information,” and
6               UNITED STATES V. SALMAN

explaining that he “owe[d] somebody.” After Michael turned
down Maher’s offer of money, Maher gave him a tip about an
upcoming acquisition instead.

    Finally, the Government presented evidence that Salman
was aware of the Kara brothers’ close fraternal relationship.
The Salmans and the Karas were tightly knit families, and
Salman would have had ample opportunity to observe
Michael and Maher’s interactions at their regular family
gatherings. For example, Michael gave a toast at Maher’s
wedding, which Salman attended, in which Michael described
how he spoke to his younger brother nearly every day and
described Maher as his “mentor,” his “private counsel,” and
“one of the most generous human beings he knows.” Maher,
overcome with emotion, began to weep.

    The jury found Salman guilty on all five counts. Salman
then moved for a new trial pursuant to Rule 33 of the Federal
Rules of Criminal Procedure, on the ground, inter alia, that
there was no evidence that he knew that the tipper disclosed
confidential information in exchange for a personal benefit.
The district court denied his motion in full.

    Salman timely appealed, but did not raise a challenge to
the sufficiency of the evidence in his opening brief. After he
filed his reply brief, the United States Court of Appeals for
the Second Circuit, in United States v. Newman, 773 F.3d 438
(2d Cir. 2014), vacated the insider-trading convictions of two
individuals on the ground that the Government failed to
present sufficient evidence that they knew the information
they received had been disclosed in breach of a fiduciary
duty. Id. at 455. After the Second Circuit denied the
Government’s petition for panel rehearing and rehearing en
banc, United States v. Newman, Nos. 13-1837, 13-1917, 2015
                 UNITED STATES V. SALMAN                         7

WL 1954058 (2d Cir. Apr. 3, 2015), Salman promptly moved
for leave to file a supplemental brief arguing that the
Government’s evidence in the instant case was insufficient
under the standard announced in Newman, which he urged
this Court to adopt. We granted Salman’s motion and gave
the Government an opportunity to respond.

                         DISCUSSION

                                A.

     The threshold question is whether Salman waived the
present argument by failing to raise it in his opening brief on
this appeal, even though he had raised it below and, after
Newman was decided, promptly raised it in a supplemental
brief that the Government responded to before oral argument.
Ordinarily, we will not consider “‘matters on appeal that are
not specifically and distinctly argued in appellant’s opening
brief.’” United States v. Ullah, 976 F.2d 509, 514 (9th Cir.
1992) (quoting Miller v. Fairchild Indus., Inc., 797 F.2d 727,
738 (9th Cir. 1986)). However, we make an exception to this
general rule (1) for “good cause shown” or “if a failure to do
so would result in manifest injustice,” (2) “when it is raised
in the appellee’s brief,” or (3) “if the failure to raise the issue
properly did not prejudice the defense of the opposing party.”
Id. (internal citation and quotation marks omitted).

    The third exception applies here. As both parties have had
a full opportunity to brief this issue and to address it at oral
argument, the Government cannot complain of prejudice. See
Hall v. City of Los Angeles, 697 F.3d 1059, 1072 (9th Cir.
2012) (finding no prejudice where parties had opportunity to
brief the issue); Ibarra-Flores v. Gonzales, 439 F.3d 614, 619
n.4 (9th Cir. 2006) (considering issue not raised in opening
8                  UNITED STATES V. SALMAN

brief where opponent had an opportunity to address the issue
at oral argument). Accordingly, we address Salman’s claim
on the merits.

                                   B.

    In reviewing a challenge to the sufficiency of the
evidence, we must determine whether, when viewed in the
light most favorable to the Government, the evidence was
“‘adequate to allow any rational trier of fact to find the
essential elements of the crime beyond a reasonable doubt.’”
United States v. Richter, 782 F.3d 498, 501 (9th Cir. 2015)
(quoting United States v. Nevils, 598 F.3d 1158, 1164 (9th
Cir. 2010) (en banc)). Salman urges us to adopt Newman as
the law of this Circuit, and contends that, under Newman, the
evidence was insufficient to find either that Maher Kara
disclosed the information to Michael Kara in exchange for a
personal benefit, or, if he did, that Salman knew of such
benefit.2

    The “personal benefit” requirement for tippee liability
derives from the Supreme Court’s opinion in Dirks v. S.E.C.,
463 U.S. 646 (1983). Dirks presented an unusual fact pattern.
Ronald Secrist, a whistleblower at a company called Equity
Funding, had contacted Raymond Dirks, a well-known
securities analyst, after Secrist’s prior disclosures to the
Securities and Exchange Commission (“SEC”) had gone for

    2
    Another holding of Newman — that even a remote tippee must have
some knowledge of the personal benefit (however defined) that the inside
tipper received for disclosing inside information, see Newman, 773 F.3d
at 450 — is not at issue here, because the jury was instructed that it had
to find that Salman “knew that Maher Kara personally benefitted in some
way, directly or indirectly, from the disclosure of the allegedly inside
information to Mounir (‘Michael’) Kara.”
                    UNITED STATES V. SALMAN                              9

naught. Id. at 649 & 650 n.3. Secrist, for no other purpose
than exposing the Equity Funding fraud, disclosed inside
information about the company to Dirks, who in turn
launched his own investigation that eventually led to public
exposure of a massive fraud. Id. at 649–50. However, in the
process of his investigation, Dirks openly discussed the
information provided by Secrist with various clients and
investors, some of whom then sold their Equity Funding stock
on the basis of that information. Id. at 649. Upon learning
this, the SEC charged Dirks with securities fraud, and this
position was upheld by an SEC Administrative Law Judge
and affirmed by the District of Columbia Circuit, after which
certiorari was granted. Id. at 650–52.3

    When the case came to the Supreme Court, Justice
Powell, writing for the Court, began by noting that,
whistleblowing quite aside, corporate insiders, in the many
conversations they typically have with stock analysts, often
accidentally or mistakenly disclose material information that
is not immediately available to the public. Id. at 658–59.
Thus, “[i]mposing a duty to disclose or abstain solely because
a person knowingly receives material nonpublic information
from an insider and trades on it could have an inhibiting
influence on the role of market analysts, which the SEC itself
recognizes is necessary to the preservation of a healthy
market.” Id. at 658. At the same time, the Court continued,
“[t]he need for a ban on some tippee trading is clear. Not only
are insiders forbidden by their fiduciary relationship from
personally using undisclosed corporate information to their


    3
       The Department of Justice, which successfully prosecuted the
perpetrators of the fraud and viewed Dirks as a hero, took the unusual step
of filing an amicus brief in the Supreme Court urging rejection of the
SEC’s theory. Id. at 648.
10                  UNITED STATES V. SALMAN

advantage, but they may not give such information to an
outsider for the same improper purpose of exploiting the
information for their personal gain.” Id. at 659.

    “Thus, the test is whether the insider personally will
benefit, directly or indirectly, from his disclosure,” id. at 662,
for in that case the insider is breaching his fiduciary duty to
the company’s shareholders not to exploit company
information for his personal benefit.4 And a tippee is equally
liable if “the tippee knows or should know that there has been
[such] a breach,” id. at 660, i.e., knows of the personal
benefit.

    Of particular importance here, the Court then went on to
define what constitutes the “personal benefit” that constitutes
the breach of fiduciary duty. It would include, for example,
“a pecuniary gain or a reputational benefit that will translate
into future earnings.” Id. at 663. However, “[t]he elements of
fiduciary duty and exploitation of nonpublic information also
exist when an insider makes a gift of confidential information
to a trading relative or friend.” Id. at 664 (emphasis
supplied).

    The last-quoted holding of Dirks governs this case.
Maher’s disclosure of confidential information to Michael,
knowing that he intended to trade on it, was precisely the
“gift of confidential information to a trading relative” that
Dirks envisioned. Id. Indeed, Maher himself testified that, by
providing Michael with inside information, he intended to


 4
   The same is true in a so-called “misappropriation” case, like the instant
case, where the fiduciary duty is owed, not to the shareholders, but to the
tipper’s employer, client, or the like. See United States v. O’Hagan,
521 U.S. 642, 652–53 (1997).
                UNITED STATES V. SALMAN                     11

“benefit” his brother and to “fulfill[] whatever needs he had.”
As to Salman’s knowledge, Michael Kara, whose testimony
we must credit on a challenge to the sufficiency of the
evidence, testified that he directly told Salman that it was
Michael’s brother Maher who was, repeatedly, leaking the
inside information that Michael then conveyed to Salman,
and that Salman later agreed that they had to “protect” Maher
from exposure. Given the Kara brothers’ close relationship,
Salman could readily have inferred Maher’s intent to benefit
Michael. Thus, there can be no question that, under Dirks, the
evidence was sufficient for the jury to find that Maher
disclosed the information in breach of his fiduciary duties and
that Salman knew as much.

    Salman, however, argues that the Second Circuit in
Newman interpreted Dirks to require more than this. Of
course, Newman is not binding on us, and our own reading of
Dirks is guided by the clearly applicable language italicized
above. But we would not lightly ignore the most recent ruling
of our sister circuit in an area of law that it has frequently
encountered.

    The defendants in Newman, Todd Newman and Anthony
Chiasson, both portfolio managers, were charged with trading
on material non-public information regarding two companies,
Dell and NVIDIA, obtained by a group of analysts at various
hedge funds and investment firms. Newman, 773 F.3d at
442–43. The information came to them via two distinct
tipping chains. The Dell tipping chain originated with Rob
Ray, a member of Dell’s investor relations department. Id. at
443. Ray tipped information regarding Dell’s earnings
numbers to Sandy Goyal, an analyst. Id. Goyal, in turn,
relayed the information to Jesse Tortora, another analyst, who
relayed it to his manager, Newman, as well as to other
12              UNITED STATES V. SALMAN

analysts including Spyridon Adondakis, who passed it to
Chiasson. Id. The NVIDIA tipping chain began with Chris
Choi, of NVIDIA’s finance unit, who tipped inside
information to his acquaintance Hyung Lim, who passed it to
Danny Kuo, an analyst, who circulated it to his analyst
friends, including Tortora and Adondakis, who in turn gave
it to Newman and Chiasson. Id. Having received this
information, Newman and Chiasson executed trades in both
Dell and NVIDIA stock, generating lavish profits for their
respective funds. Id.

    The Government presented the following evidence
regarding the relationships between the Dell and NVIDIA
insiders and their respective tippees. The Dell tipper and
tippee, Ray and Goyal, attended business school together and
had been colleagues at Dell, but were not “close.” Id. at 452.
Goyal provided career advice and assistance to Ray, for
example, discussing the qualifying examination required to
become an analyst and editing his résumé. Id. This advice
began before Ray started to give Goyal information, and
Goyal testified that he would have given it as a routine
professional courtesy without receiving anything in return. Id.
As to the NVIDIA tips, the insider, Choi, and his tippee, Lim,
were “family friends” who met through church and
occasionally socialized with one another. Id. Lim testified
that he did not provide anything of value to Choi in return for
the tips, and that Choi did not know that he was trading in
NVIDIA stock. Id.

    The Second Circuit held that this evidence was
insufficient to establish that either Ray or Choi received a
personal benefit in exchange for the tip. It noted that,
although the “personal benefit” standard is “permissive,” it
“does not suggest that the Government may prove the receipt
                UNITED STATES V. SALMAN                     13

of a personal benefit by the mere fact of a friendship,
particularly of a casual or social nature.” Id. Instead, to the
extent that “a personal benefit may be inferred from a
personal relationship between the tipper and tippee, . . . such
an inference is impermissible in the absence of proof of a
meaningfully close personal relationship that generates an
exchange that is objective, consequential, and represents at
least a potential gain of a pecuniary or similarly valuable
nature.” Id. (emphasis supplied).

    Applying these standards, the court concluded that the
“circumstantial evidence . . . was simply too thin to warrant
the inference that the corporate insiders received any personal
benefit in exchange for their tips,” id. at 451–52, and
furthermore, that “the Government presented absolutely no
testimony or any other evidence that Newman and Chiasson
knew they were trading on information obtained from
insiders, or that those insiders received any benefit in
exchange for such disclosures.” Id. at 453.

    Salman reads Newman to hold that evidence of a
friendship or familial relationship between tipper and tippee,
standing alone, is insufficient to demonstrate that the tipper
received a benefit. In particular, he focuses on the language
indicating that the exchange of information must include “at
least a potential gain of a pecuniary or similarly valuable
nature,” id. at 452, which he reads as referring to the benefit
received by the tipper. Salman argues that because there is no
evidence that Maher received any such tangible benefit in
exchange for the inside information, or that Salman knew of
any such benefit, the Government failed to carry its burden.

    To the extent Newman can be read to go so far, we decline
to follow it. Doing so would require us to depart from the
14               UNITED STATES V. SALMAN

clear holding of Dirks that the element of breach of fiduciary
duty is met where an “insider makes a gift of confidential
information to a trading relative or friend.” Dirks, 463 U.S. at
664. Indeed, Newman itself recognized that the “‘personal
benefit is broadly defined to include not only pecuniary gain,
but also, inter alia, . . . the benefit one would obtain from
simply making a gift of confidential information to a trading
relative or friend.’” Newman, 773 F.3d at 452 (alteration
omitted) (quoting United States v. Jiau, 734 F.3d 147, 153
(2d Cir. 2013)).

    In our case, the Government presented direct evidence
that the disclosure was intended as a gift of market-sensitive
information. Specifically, Maher Kara testified that he
disclosed the material nonpublic information for the purpose
of benefitting and providing for his brother Michael. Thus,
the evidence that Maher Kara breached his fiduciary duties
could not have been more clear, and the fact that the disclosed
information was market-sensitive — and therefore within the
reach of the securities laws, see O’Hagan, 521 U.S. at 656 —
was obvious on its face. If Salman’s theory were accepted
and this evidence found to be insufficient, then a corporate
insider or other person in possession of confidential and
proprietary information would be free to disclose that
information to her relatives, and they would be free to trade
on it, provided only that she asked for no tangible
compensation in return. Proof that the insider disclosed
material nonpublic information with the intent to benefit a
trading relative or friend is sufficient to establish the breach
of fiduciary duty element of insider trading.

    In Salman’s case, the jury had more than enough facts, as
described above, to infer that when Maher Kara gave inside
information to Michael Kara, he knew that there was a
                UNITED STATES V. SALMAN                    15

potential (indeed, a virtual certainty) that Michael would
trade on it. And while Salman may not have been aware of all
the details of the Kara brothers’ relationship, the jury could
easily have found that, as a close friend and member (through
marriage) of the close-knit Kara clan, Salman must have
known that, when Maher gave confidential information to
Michael, he did so with the “intention to benefit” a close
relative. Id.

    Accordingly, we find that the evidence was more than
sufficient for a rational jury to find both that the inside
information was disclosed in breach of a fiduciary duty, and
that Salman knew of that breach at the time he traded on it.

   AFFIRMED.
