David L. Axelrod, left, and Hannah L. Welsh, right, of Ballard Spahr. Courtesy photos Will a Federal Law Against Insider Trading Finally Become Reality?
To many this will come as a complete surprise, but there is no federal law that explicitly outlaws insider trading. Rather, for decades the SEC and the Department of Justice, with the endorsement of federal judges, have used the general securities fraud statutes to patch together a complex and problematic insider trading common law.
June 18, 2021 at 12:59 PM
8 minute read
To many this will come as a complete surprise, but there is no federal law that explicitly outlaws insider trading. Rather, for decades the SEC and the Department of Justice, with the endorsement of federal judges, have used the general securities fraud statutes to patch together a complex and problematic insider trading common law. After years of criticism, however, that could now be changing. On May 18, the U.S. House of Representatives passed legislation, which, for the first time in history, would explicitly outlaw insider trading in the United States. It is unclear whether the Senate will act to pass this law, which would require bipartisan support. But if so, it would represent a dramatic change for how the government prosecutes insider trading—and a likely increase in enforcement.
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