U.S. Senators Propose Bill Regarding Insider Trading (with Lofchie Comment)

Senator Jack Reed (D-RI) and Senator Bob Menendez (D-NJ) introduced a bill titled "Stop Illegal Insider Trading Act" (S. 702). The bill is intended to strengthen prohibitions on insider trading.

Sponsored by Senator Reed, the bill amends Exchange Act Section 10 by adding language that would, among other things, explicitly forbid traders and other persons "[t]o purchase, sell, or cause the purchase or sale of any security on the basis of material information that the person knows or has reason to know is not publicly available." The bill also provides a definition of "not publicly available."

Lofchie Comment: Perhaps the definition of "not publicly available" should be limited to information that the possessor is not free to use legally in connection with securities trading activities. It is best not to suggest that a good analyst who digs for hard-to-find information has violated the law by finding information that isn't publicly available.

See: S. 702; Press Release.See also: Insider Trading Specialty Page (available to Cabinet subscribers only).