One month since SCOTUS opened doors to insider trading
WASHINGTON, DC—On October 5, the Supreme Court declined to hear United States v. Newman, a decision by the 2nd Circuit Court of Appeals that left the door open for insider trading on Wall Street. Since then, numerous stories have been written about the detrimental effect the decision is having on the government’s ability to enforce the law. However, there has not been as much written on how to fix the problem.
“There’s an enormous focus on the effects of the 2nd Circuit ruling, but not on the fact that there’s a simple, readily available solution,” said Jim Himes, member of the House Financial Services Committee and author of the Insider Trading Prohibition Act. “If the courts won’t act, and the SEC can’t act, it falls to the legislature to fix the law to ensure that wrongdoers are punished. It’s the most fundamental role Congress plays.”
Himes’ legislation, the Insider Trading Prohibition Act makes it a federal crime to trade a security based on material, nonpublic information that was wrongfully obtained, ending decades of ambiguity for a crime that has never been clearly defined by law. The bill has eighteen bipartisan cosponsors and has received praise in several media outlets.
“We’ve had a month for people to wring their hands and see that the law as it stands isn’t giving us the desired results,” continued Himes. “We don’t need another month or year to watch the same story play out again and again. Congress should act immediately to pass my bill and give prosecutors power they need to go after bad actors that are making millions off of wrongfully obtained information.”
The full text of the Insider Trading Prohibition Act is here.