The Evolution of Insider Trading Law
The U.S. Supreme Court and SEC Establish Precedent
Insider trading law has been shaped by competing institutional forces and theoretical perspectives. While the Securities and Exchange Commission (SEC) and federal prosecutors have pushed for broad theories of liability rooted in the value of equal access to information, the courts have implemented a narrower framework predicated on fiduciary duty and fraud. Congress, however, has not weighed in on this back-and-forth. Despite the attention insider trading attracts, legislators have not enacted a statutory definition for the offense. Its elements are instead the product of judicial decision-making, with SEC rules supplementing the core prohibition. Nevertheless, recent Congresses have shown increasing interest…
