Insider Trading

Abstract

This chapter addresses regulation of insider trading in the United States. Uncertainties and inconsistencies prevail in this setting resulting in disparate treatment for similarly situated actors. Other developed countries, while applying many principles of U.S. securities law to their securities markets, have rejected the U.S. approach in the insider trading context. To redress this situation, Congress should enact comprehensive legislation that meaningfully addresses the contours of the insider trading prohibition. Among other mandates, this legislation would: require corporate insiders to provide advance notice of their contemplated transactions in the subject company’s equity securities; bar corporate insiders and other access persons from trading in the subject company’s securities during the interval between the occurrence of a reportable event and the making of a SEC filing (such as a Form 8-K); close loopholes that currently exist with respect to the propriety of insider trading plans; and adopt a comprehensive access approach governing the legality of trading and tipping on the basis of material nonpublic information.