NCJ Number
115077
Journal
American Criminal Law Review Volume: 26 Issue: 1 Dated: (Summer 1988) Pages: 7-119
Date Published
1988
Length
113 pages
Annotation
The enactment of the Insider Trading Proscriptions Act of 1988 would represent a significant step toward the goal of providing a precise and clear set of rules to put the public on notice as to what conduct will lead to the appropriately harsh criminal sanctions against insider trading of securities.
Abstract
The current Federal securities laws neither define nor expressly prohibit what is called insider trading. Instead, the offense of trading while in possession of a wrongfully obtained or used material informational advantage has been inferred from the broad antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. About 40 years ago the Securities and Exchange Commission decided that these laws prohibited trading by corporate insiders in their own company's securities while in possession of material, nonpublic information relating to those securities. Administrative and judicial proceedings continued to develop the definitions of the offense of insider trading. However, most of the government's criminal cases have not involved situations involving any doubt about the proper statutory foundation. The proposed legislation sets forth explicit definitions of and prohibitions against the offenses of insider trading and tipping. Passage of this legislation is a logical next step in the effort to eradicate this form of unfair securities trading in the Nation's capital markets. 147 footnotes, text of the proposed Senate bill, and footnote noting that Congress has enacted legislation substantially similar to the House of Representatives bill discussed in the text.