Insider Trading Statute and Other Recommendations From the Bharara Task Force

Insider trading law has been in an almost continuous state of flux for the past six decades. In late 2018, SEC Commissioner Robert J. Jackson, Jr. and Preet Bharara, former U.S. Attorney for the Southern District of New York, announced the creation of a blue-ribbon task force (Task Force) to develop proposals for updating the law on insider trading. The Task Force recently issued a report recommending new clearer and simplified insider trading legislation based on the concept of “wrongful” possession of material nonpublic information. Among other recommendations, the report proposes eliminating the problematic concept of “personal benefit” and the differing treatment of so‑called “classical” and “misappropriation” insider trading. After summarizing insider trading jurisprudence, this article analyzes the Task Force’s recommendations and the basis for those recommendations. See our two‑part series on mitigating insider trading risks: “Relevant Laws and Regulations; Internal Controls; Restricted Lists; Confidentiality Agreements; Personal Trading; Testing; and Training” (Sep. 27, 2018); and “Expert Networks, Political Intelligence, Meetings With Management, Data Rooms, Information Barriers and Office Sharing” (Oct. 11, 2018).

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