U.S. District Judge Jed S. Rakoff of the Southern District of New York, in an interview with former Manhattan U.S. Attorney Preet Bharara, on Friday criticized the "judge-made" nature of federal insider trading law and called on Congress to address various "difficulties" that had been created by inconsistent court rulings.

Rakoff, a 24-year veteran of the U.S. District Court for the Southern District of New York, said the law surrounding insider trading prosecutions and civil actions had become muddled and confusing in light of sometimes conflicting appellate court rulings that highlighted the need for congressional guidance.

"It's really been judge-made law, almost from the very outset, and that means it's not clear, it's not certain, it varies from the common-law tradition from case to case," Rakoff said. "And in my view it's become too obscure to really serve its purposes, which ultimately are punishment, deterrence and creating a better market."

"There's tremendous value in having Congress look at the specific problem of insider trading, determine what are the appropriate penalties for doing it, what are the appropriate standards for holding people to," he said

Rakoff's comments echoed the findings of the Bharara Task Force on Insider Trading, which concluded in a report last month that a new statute was needed to lay out the specific elements of insider trading offenses. The task force, headed by Bharara, included Rakoff as well as professors, judges and former prosecutors and enforcement officials.

Part of the problem, Rakoff said Friday, was a lack of clarity as to how judges should interpret a Supreme Court mandate requiring an insider to receive a "personal benefit" in exchange for passing along nonpublic information. Courts, he said, also struggle with the "hybrid" nature of the statute, which addresses both civil and criminal liability.

"It is a dilemma, one that Congress could easily solve by creating specific legislation," Rakoff said.

The remarks came as part of a wide-ranging discussion at the Institute for Law & Economic Policy's Annual Symposium at Fordham University School of Law, which also touched on issues of judicial independence and the rule of law under the Trump administration.

Bharara was abruptly fired by President Donald Trump in 2017 after he was reportedly assured that he'd be allowed to stay on as U.S. attorney in Manhattan. He has since launched a legal and current-affairs podcast that included Rakoff as one of its first guests.

On Friday, Bharara pressed Rakoff on recent actions by the Trump administration, including the intervention of Attorney General William Barr and senior Justice Department officials in the sentencing of Trump adviser and ally Roger Stone.

Rakoff declined to comment on the Stone case specifically, though he did defend how U.S. District Judge Amy Berman Jackson of the District of Columbia handled the matter, which exposed her to criticism by the president. Rakoff said that the Constitution protected federal judges from undue political influence, but he said he worried about prosecutors losing their own sense of independence.

"Were the Department of Justice ever to lose that valuable trait, I think it would be a serious blow to justice in this country," Rakoff said.

When asked if there was a particular threat to prosecutorial independence, Rakoff demurred: "I'm glad you haven't lost the knack for asking rhetorical questions," he told Bharara to laughter from the audience.

"Do I have a view? Of course," he said. "Am I going to share my view? I believe in judicial restraint."

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